New-Home Sales Decline in November
Sales pace still remains strong year over year.
Sales of new single-family homes decreased 11% in November; however, even with the drop, year-over-year gains remained strong—20.8% above the November 2019 estimate—according to the U.S. Census Bureau and the Department of Housing and Urban Development.
Estimates reveal that new-home sales were at a seasonally adjusted annual rate of 841,000 for November. This is down from the revised October rate of 945,000 and significantly above the November 2019 estimate of 696,000.
“We’ve made the point for several months now that sales have continued to eclipse its normal relationship to the pace of construction starts. Until home builders could accelerate their rate of construction, we argued that home sales were likely to pull back to a more sustainable rate. Therefore, we had expected a decline in November,” said Fannie Mae chief economist Doug Duncan. “However, large negative revisions to the prior three months resulted in a sales pace that was significantly weaker than we’d forecast. While we will likely revise downward our near-term sales forecast, this also implies that much of our anticipated sales/starts rebalancing has already occurred.”
The seasonally adjusted estimate of new homes for sale was 286,000 at the end of November, representing a supply of 4.1 months at the current sales rate.
“We see the November new-home sales decline being primarily driven by a comparative lack of new homes available for purchase, rather than a significant slowdown in demand,” added Duncan. “Prior to the data revision, the month’s supply of homes for sale at the current pace was only 3.3, a record low in the series dating back to 1963, while the share of homes sold-but-not-yet-started was at a level only seen during the housing bubble in 2005. With the revision and pullback, the ratio rose to 4.1 in November, indicating that the sales pace was moving in a more sustainable direction (around five months is more typical). We expect a strong pace of sales to continue into the new year, but a further pullback may still occur over the next couple of months.”
The median sales price of new houses sold in November was $335,300. Additionally, the median existing-home price for all housing types was $310,800 in November, up 14.6% from the prior year. This marks 105 straight months of year-over-year gains.
According to the NAR, total housing inventory at the end of November totaled 1.28 million units, down 9.9% from October and down 22% year over year. Unsold inventory is at an all-time low of 2.3 months of supply at the current sales pace. This is down from 2.5 months in October and 3.7 months in November 2019.
Properties typically were on the market for 21 days in November, which is seasonally even with October and down from 38 days in November 2019. Almost three-quarters of homes, 73%, sold in November were on the market for less than a month.