In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest new home sales data.
- Sales of newly constructed homes rose in November by 4.4 percent from the prior month, and are higher by 15.3 percent from one year ago. The 377,000 annualized sales pace is the highest in nearly 3 years. However, there is ample room for further improvement to get us back to the pre-housing-bubble sales pace of 900,000 or so.
- The median price of new homes jumped by 15 percent to $246,200. Higher copper and lumber prices are no doubt partly driving up the price of a newly built home. The faster rise in new home prices, with a widening gap against existing home prices, could be a forerunner for potential catch-up price gains for existing homes in upcoming years.
- The inventory of newly constructed homes remains essentially at a 50-year low. Homebuilders need to ramp up production even further. Large national builders are tapping Wall Street funds to up construction activity. However, small local builders are having a difficult time obtaining construction loans.
- On a technical note, this new home sales data are contract signings and not closings. Also, only single-family homes are included and not condos.