According to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, December sales numbers rose 3.7 percent to a seasonally adjusted annual rate of 621,000 units after a downwardly revised November report.
“The slight gain for 2018 new home sales reflects solid underlying demand for homeownership,” says NAHB chairman Greg Ugalde. “Housing affordability remains a challenge across the country, but conditions have improved in early 2019, as illustrated by the recent uptick in builder confidence.”
“Despite a period of weakness in the fall, new home sales ended the year with a small gain,” says NAHB chief economist Robert Dietz.
“While the December sales pace improved on a monthly basis, the current rate of sales remains off the post-Great Recession trend due to housing affordability concerns made worse by the rise in mortgage interest rates at the end of the year. We expect lower mortgage rates in the early months of 2019 will lead to additional new home demand.”
Inventory of New Homes Continues to Rise
In addition to adjusting for seasonal effects, the December reading of 621,000 units is the number of homes that would sell if this pace continued for the next 12 months.
The inventory of new homes for sale continued to rise in December to 344,000 homes available for sale. A year prior, new single-family home inventory stood at 294,000.
In addition, the median sales price increased in December to $318,600, although it is lower than 2017's median sales price of $343,300. This is primarily due to the increased use of price incentives and a slow change toward additional entry-level inventory.
Regionally, on a total year basis for 2018, new home sales rose four percent in the South and six percent in the Midwest but declined 16 percent in the Northeast and one percent in the West.