Sales of new homes fell in December to an annualized rate of 694,000, according to the Census Bureau and the Department of Housing and Urban Development.
According to the Census data, the December pace declined from November’s pace, which was downwardly revised from 719,000 to 697,000.
December’s total, which is 0.4% below November’s pace, was 23% higher than December 2018, when new home sales sat an annualized rate of 564,000.
Despite this annual increase, Matthew Speakman, a Zillow economist, said December’s new home sales data was a disappointing stumble to what was otherwise the best year for new home sales since before the Great Recession.
“After revisions, this series has now fallen month-over-month in each of the past three months,” Speakman said. “These numbers could serve as a bit of a wakeup call for builders that have grown increasingly confident in the demand for the homes they’ve been putting up with growing vigor since the summer.”
“Still, with overall inventory as scarce as it is currently, it’s clear that more construction is desperately needed,” Speakman said. “And low mortgage rates, a robust labor market and stabilizing geopolitical tensions suggest that demand for housing will stick around, and buyers are hungry for more housing options.”
In 2019, the seasonally adjusted estimate of new homes for sale by the end of December was 681,000, rising 10.3% from the 2018 figure of 617,000.
The seasonally‐adjusted estimate of new houses for sale at the end of December was 327,000, representing a supply of 5.7 months at the current sales rate, rising from the previous month’s pace.
The median sales price of new homes was $331,400, while the average sale price was $384,500, according to census data.
Navy Federal Credit Union Corporate Economist Robert Frick said while December’s new home sales disappointed, 2019 overall showed good growth driven by lower mortgage rates.
“A clue to the lack of a vigorous new home market was that once again the median sales price rose, and is now up to $331,000,” Frick said. “Considering half of home shoppers say they can’t afford a house priced above $300,000, more builders must start reducing prices to increase sales.”
“With housing starts surging we should see plenty more new homes on the market this year, but if they’re not more affordable, sales will be stunted, and many more newly-formed families will be shut out of homeownership,” Frick said.