December 2019 Residential Sales, Inventory and Prices

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Sales of new single-family houses in December 2019 were at a seasonally adjusted annual rate (SAAR) of 694,000 units (728,000 expected). This is 0.4% (±15.1%)* below the revised November rate of 697,000 (originally 719,000), but 23.0% (±20.0%) above the December 2018 SAAR of 564,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +23.7%. For longer-term perspectives, NSA sales were 50.0% below the “housing bubble” peak and 10.1% below the long-term, pre-2000 average.

An estimated 681,000 new homes were sold in 2019. This is 10.3% (±6.4%) above the 2018 figure of 617,000.

The median sales price of new houses sold in December rose to $331,400 ($10,500 or +3.3% MoM); meanwhile, the average sales price increased to $384,500 ($6,900 or +1.8%). Starter homes (defined here as those priced below $200,000) comprised 10.6% of the total sold, down from the year-earlier 13.2%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 2.1% of those sold in December, down from 5.3% a year earlier.

* 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 December, single-unit completions increased by 6,000 units (+0.7%). Because sales ticked down (3,000 units; -0.4%) while completions rose, inventory for sale expanded in both absolute (+5,000 units) and months-of-inventory (+0.2 month) terms. 

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Existing home sales advanced in December (190,000 units or +3.6%), to a SAAR of 5.54 million units. Inventory of existing homes for sale shrank in absolute (-240,000 units) and months-of-inventory (-0.7 month) terms. Because new-home sales fell while resales rose, the share of total sales comprised of new homes retreated to 11.1%. The median price of previously owned homes sold in December increased to $274,500 ($3,200 or +1.2% MoM). 

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Housing affordability marginally improved (+0.5 percentage point) despite the median price of existing homes for sale in November inching up by $200 (+0.1%; +5.4 YoY), to $274,000. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change of +0.2% (+3.5% YoY).

"The U.S. housing market was stable in November,” said Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices. “With the month’s 3.5% increase in the national composite index, home prices are currently 59% above the trough reached in February 2012, and 15% above their pre-financial crisis peak. November’s results were broad-based, with gains in every city in our 20-city composite.

“At a regional level, Phoenix retains the top spot for the sixth consecutive month, with a gain of 5.9% for November. Charlotte and Tampa rose by 5.2% and 5.0% respectively, leading the Southeast region. The Southeast has led all regions since January 2019.”

“As was the case last month, after a long period of decelerating price increases, the National, 10-city, and 20-city Composites all rose at a modestly faster rate in November than they had done in October. This increase was broad-based, reflecting data in 15 of 20 cities. It is, of course, still too soon to say whether this marks an end to the deceleration or is merely a pause in the longer-term trend.” 

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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.