November New Home Sales Up 5.8%
Over the holiday season, HUD and the Census Bureau revealed that new home sales increased by over 6% from October and exceeded the November forecast. According to the data, sales of new single-family homes increased to a seasonally adjusted annual rate of 640,000 in November, up 5.8% from the revised October pace of 605,000.
Sales in the South declined by 2.1% in November, down to 369,000 units from 377,000 units in October. However, new home sales in the West jumped by over 28% in November to 171,000 units, seasonally adjusted yearly, from 134,000 units in October. Sales in the Midwest increased by 21.3% in November to 57,000 units from 47,000 units in October. Sales in the Northeast decreased by 8.5% in November from 47,000 units in October to 43,000 units.
According to Odeta Kushi, Deputy Chief Economist with First American Financial Corp., the purchases of homes for which construction has not yet begun accounted for most of the increase in new home sales in November, which were up 46.7% month over month.
Furthermore, new homes sold in November saw a median sales price increase to $471,200 and an average sales price increase of $543,600. At the end of November, the seasonally adjusted estimate of new homes for sale rose to 461,000. The current sales rate represents a housing supply of 8.6 months.
Home Prices Hit Lowest Rate Of Appreciation In 2 Years
According to a CoreLogic report, the 21-month record of double-digit growth in home prices ended in November with an increase of less than 9% compared to the same month in 2021.
Using the data of home prices, 16 states, including Florida and South Carolina, continued to experience yearly double-digit growth. However, "appreciation is decelerating in many popular housing markets across the country" in general. In sharp contrast to the previous month, when home price growth rose 20.9% in April compared to the same month in 2021, home prices increased 8.6% year over year in November. From October 2022, housing prices decreased by 0.2%.
Potential borrowers are concerned about the unstable stock market, a recession entering the new year, and homes no longer viable investments. The analysts at CoreLogic predict that home price increases will decelerate further into 2023 and reach 2.8% by November. According to Selma Hepp, deputy chief economist at CoreLogic, "2023 will present its own challenges, as consumers remain wary of both the housing market and the overall economic outlook."
However, the fact that mortgage rates dropped from over 7% in October to 6.42% in December may encourage buyers to continue looking for a home. Hepp regards the decrease in mortgage rates as boding well for the housing market.
Pending Homes Down 6th Straight Month
The National Association of Realtors announced Wednesday that pending home sales fell for the sixth straight month in November, reaching their second-lowest monthly figure in 20 years.
In November, the Pending Home Sales Index, a measure of impending home sales based on contract signings, decreased by 4.0% to 73.9. Pending transactions decreased by 37.8% yearly.
Transactions dropped in each of the four U.S. regions monthly and year over year. The index decreased 34.9% in the Northeast from a year ago and 7.9% from October to 63.3. The Midwest index dropped 31.6% from a year ago to 77.8 in November. The South decreased by 2.3% to 88.5, a 38.5% decrease from the previous year; the West index fell 45.7% from a year earlier to 55.1 in November, a 0.9% decrease.
"The Midwest region — with relatively affordable home prices — has held up better, while the unaffordable West region suffered the largest decline in activity," said NAR Chief Economist Lawrence Yun.
Next week's potential market-moving reports are:
Monday, January 9th – NY Fed Inflation Expectations, Consumer CreditTuesday, January 10th – NFIB Small Business Index, Wholesale InventoriesWednesday, January 11th – No ReportThursday, January 12th – Initial and Continuing Jobless Claims, Core CPI, Federal BudgetFriday, January 13th – UMich Consumer Inflation Expectations, Consumer Sentiment Index
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