Sales of new homes came in at a seasonally adjusted annual rate of 719,000 in November, below expectations but still a 1.3% increase over the revised October figures, which were adjusted down to 710,000. Compared to November 2018, new home sales are up by almost 17%.
Existing home sales came in at an annualized rate of 5.35 million in November, a 1.7% drop from October but up 2.7% from last year, indicating there is still strength left in the market. The average time a house spends on the market continues to drop.
Supply constraints continue to be the headline concern for the housing market. New home inventories dropped to a 5.4 months’ supply in November, while existing home inventories are at 3.7 months.
The median sales price for new homes sold climbed to $330,800, over 7.2% higher than a year ago. The median sales price for existing homes rose to $271,300, 5.4% more than last year. Cost savings from low mortgage rates help persuade buyers to purchase new homes, but lack of supply at the entry-level end of the market is keeping many people from participating. The rise in new home prices reflects the lack of supply on the market.
A supply of 6 to 7 months is seen as healthy and close to a clearing pace for the broader market. We are way below those thresholds. The result is escalating prices, particularly for entry-level properties, and a market that remains unaffordable for too many. The rebound in housing is still a mere shadow of what it should be, given pent-up demand.
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