New home sales hit 12-year high
New home sales enjoyed their best three-month performance since 2007 after seeing a big uptick in November, according to U.S. Commerce Department data published Monday. Economists say low mortgage rates and unemployment combined with strong sales growth led to the boost in sales.
All told, sales of new single-family homes jumped 1.3% in November to an annualized pace of 719,000.
“Fueled by the limited number of resales available for purchase, low interest rates, and low unemployment, new home sales are finishing the year strong,” said Greg Ugalde, chairman of the National Association of Home Builders.
Sales of new homes are now up 10% from a year ago, while booming builder confidence suggests 2020 could be a strong year for the new home industry, added the NAHB’s chief economist Robert Dietz.
It’s not all rosy, however, as the low inventory of new homes means that prices are continuing to grow. The median sales price of a new home increased by 7.2% in the last year, rising to $330,800 in November. There’s currently just a 5.4 month supply of new homes available, with 323,000 ready for sale but just 76,000 of those completed and ready to occupy.
The South region saw the biggest uptick with new home sales rising by 14.5% compared to a year ago, while the West saw sales jump 12%. New home sales were down 10.4% and 7.6% in the Northeast and Midwest, respectively.
Lawrence Yun, chief economist at the National Association of Realtors, said the lack of inventory is a pressing issue for the entire real estate industry, not only the new home market. He explained there were around 135,000 less housing starts than the long-term average, and around 5 million to 6 million off the amount needed to fully end housing shortages across the country.
“More home construction appears to be on the way as we move into 2020, as reflected in the very high confidence of home builders,” Yun said last week. “They are clearly recognizing an improving business opportunity. Overall, more construction will mean more housing inventory to choose from for consumers. Home sales can then easily rise while taming the fast growth in home prices.”