New Home Sales

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights new home sales and personal income.

• New home sales scratched out a small gain in November according to the Census. It marks the third consecutive month of sales gains. There were 315,000 contract signings to buy a newly constructed home in November versus 310,000 in the prior month.
• Compared to last year's November figures, sales were up by 9.8 percent (with Census noting a plus-or-minus 20 percent sampling error range).
• Despite the gain, new home sales activity is very low by historical comparison. However, given so many favorable factors that would support a housing market recovery, a genuine sustained recovery could be at hand.
• Note that new home sales are contracts and not closings. NAR’s existing home sales measures closings, while NAR’s pending sales measures contract signings. There is no published data on closings for new home sales. Also be mindful that new home sales comprise less than 10 percent of all sales, with the vast bulk of sales coming from existing homes.
• The inventory of newly constructed homes listed for sale fell once again. It is the lowest since the data series was created in the early 1960s, and in essence the lowest in 50 years. It was noted earlier in the week that existing home inventory is at the lowest in 6 years.
• In separate economic news, the Commerce Department indicated personal income rose by 0.1 percent while personal spending also rose by the same amount from the month prior. From 12-months ago, income rose 3.9 percent while spending rose 4.3 percent. Based on the latest data, GDP growth in the fourth quarter is likely to be right around 3 percent. No recession is in sight and probably around 2 million net new jobs will be added in 2012.