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Sales of new
single-family houses in November 2017 were at a seasonally adjusted annual rate
(SAAR) of 733,000 units (650,000 expected).
That is 17.5% (±10.4%) above the revised October rate of 624,000 and is 26.6%
(±16.6%) above the November 2016 SAAR of 579,000 units; the not-seasonally
adjusted year-over-year comparison (shown in the table above) was +30.0%. For
longer-term perspectives, not-seasonally adjusted sales were 47.2% below the
“housing bubble” peak and 0.5% below the long-term, pre-2000 average.
The
median sales price of new houses sold was $318,700 (-$900 or 0.3% MoM);
meanwhile, the average sales price tumbled to $377,100 (-$17,600 or 4.5%). Starter
homes (defined here as those priced below $200,000) comprised 11.5% of the
total sold, down from the year-earlier 15.0%; prior to the Great Recession
starter homes represented as much as 61% of total new-home sales. Homes priced
below $150,000 made up 1.9% of those sold in November, down from the year-earlier
2.5%.
* 90% confidence interval includes zero.
The Census Bureau does not have sufficient statistical evidence to conclude
that the actual change is different from zero.
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As
mentioned in our post
about housing permits, starts and completions in November, single-unit
completions fell by 36,000 units (-4.6%). The combination of decreasing completions
and rising sales (+109,000 units; +17.5%) caused months of inventory to
contract by 0.8 month; oddly, new-home inventory was stable in absolute terms (at
283,000 units), however.
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Existing home sales
jumped by 310,000 units (+5.6%) in November, to a SAAR of 5.810 million units
(5.52 million expected).
Inventory of existing homes shrank in both absolute (-130,000 units) and months-of-inventory
(-0.5 month) terms. Because new-home sales increased proportionally more quickly
than existing-home sales, the share of total sales comprised of new homes ticked
higher, to 11.2%. The median price of previously owned homes sold in November advanced
to $248,000 (+$2,000 or 0.8% MoM).
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Housing
affordability improved marginally as the median price of existing homes for
sale in October fell by $800 (-0.3%; +5.4 YoY), to $248,300. Concurrently,
Standard & Poor’s
reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home
Price indices posted a not-seasonally adjusted monthly change of +0.2% (+6.2% YoY)
-- marking a new all-time high for the index.
“Home
prices continue their climb supported by low inventories and increasing sales,”
said David
Blitzer, Managing Director & Chairman of the Index Committee at S&P
Dow Jones Indices. “Nationally, home prices are up 6.2% in the 12 months to
October, three times the rate of inflation. Sales of existing homes dropped
6.1% from March through September; they have since rebounded 8.4% in November.
Inventories measured by months-supply of homes for sale dropped from the tight
level of 4.2 months last summer to only 3.4 months in November.
“Underlying
the rising prices for both new and existing homes are low interest rates, low
unemployment and continuing economic growth. Some of these favorable factors
may shift in 2018. The Fed is widely expected to raise the Fed funds rate three
more times to reach 2% by the end of the New Year. Since home prices are rising
faster than wages, salaries, and inflation, some areas could see potential home
buyers compelled to look at renting. Data published by the Urban Institute suggests
that in some West coast cities with rapidly rising home prices, renting is more
attractive than buying.”
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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.
