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Tuesday, January 28, 2014

December 2013 U.S. Home Sales, Inventory and Prices

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Sales of new single-family homes fell by 31,000 units (7.0 percent) to 414,000 (SAAR) in December. This was well off (-13.4 percent) October’s peak rate of 463,000 units. Despite the retreat, however, sales were 4.5 percent above year-earlier levels; in fact, 2013 was the best year for sales since 2008. Meanwhile, the median price of new homes sold nudged higher (by $1,700 or 0.6 percent) to $270,200. Although the drop in starts outpaced the drop in sales during December, the three-month average starts-to-sales ratio bumped up to 1.51 (from 1.45). Click here for our post on December housing permits, starts and completions.
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Single-unit completions fell faster (-49,000 units or 8.2 percent) than sales (-31,000 units or 7.0 percent) in December. Consequently, new-home inventory dropped in absolute terms by 5,000 units but rose by 0.3 month in months-of-inventory terms. 
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Existing home sales reversed a three-month slide in December, rising by 50,000 units (1.0 percent) to 4.87 million units (SAAR); as a result, the share of total sales comprised of new homes nudged down to 7.8 percent. The median price of previously owned homes sold in December also advanced (by $2,500 or 1.3 percent), to $198,000.
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Housing affordability improved marginally in November because the median price of existing homes for sale fell for a fifth month in November (by another $1,400) to $198,000; the National Association of Realtors’ prices of existing homes for sale were $18,400 (8.6 percent) off their June 2013 high. Concurrently, Standard & Poor’s reported that both the 10- and 20-City Composites in the S&P/Case-Shiller Home Price indices posted not-seasonally adjusted monthly decreases of less than 0.1 percent in November (13.6 percent relative to a year earlier). While the year-over-year appreciation rate was the fastest since February 2006, the combination of a lower median home price and falling gains in the monthly home price index suggest home prices may be at a crossroad.
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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

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