Sales of new
single-family houses in December 2020 were at a seasonally adjusted annual rate
(SAAR) of 842,000 units (869,000 expected).
This is 1.6% (±15.8%)* above the revised November rate of 829,000 (originally 841,000
units) and 15.2% (±17.2%)* above the December 2019 SAAR of 731,000 units; the
not-seasonally adjusted (NSA) year-over-year comparison (shown in the table
above) was +12.2%. For longer-term perspectives, NSA sales were 39.4% below the
“housing bubble” peak but 5.2% above the long-term, pre-2000 average.
An
estimated 810,000 new homes were sold in 2020. This is 18.8% (±4.3%) above the
2019 figure of 683,000.
The
median sales price of new houses sold in December jumped ($12,000 or +3.5% MoM)
to a new all-time high of $355,900; meanwhile, the average sales price rose to $394,900
($1,700 or +0.4% MoM). Starter homes (defined here as those priced below
$200,000) comprised 5.5% of the total sold, down from the year-earlier 10.2%;
prior to the Great Recession starter homes represented as much as 61% of total new-home
sales. Homes priced below $150,000 were so few, the Census Bureau did not
report actual numbers.
* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
As mentioned in our post about housing permits, starts and completions in December, single-unit completions increased by 91,000 units (+10.2%). Because sales (+13,000 units; +1.6%) rose more slowly than completions, inventory for sale expanded in both absolute (+12,000 units) and months-of-inventory (+0.1 month) terms.
Existing home sales nudged higher in December (50,000 units or +1.9%), to a SAAR of 6.76 million units (6.540 million expected). Inventory of existing homes for sale contracted in both absolute (-210,000 units) and months-of-inventory terms (-0.4 month). Because resales rose proportionally more slowly than new-home sales, the share of total sales comprised of new homes inched up to 11.1%. The median price of previously owned homes sold in December retreated to $309,800 ($1,100 or -0.4% MoM).
Housing
affordability improved slightly (+1.2 percentage points) as the median
price of existing homes for sale in November fell by $2,300 (-0.7%
MoM; +15.1 YoY), to $315,500. 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 +1.1% (+9.5% YoY).
“The
trend of accelerating home prices that began in June 2020 has now reached its
sixth month with November’s emphatic report,” said Craig Lazzara, Managing Director
and Global Head of Index Investment Strategy at S&P Dow Jones Indices. “The
National Composite Index gained 9.5% relative to its level a year ago,
accelerating from October’s 8.4% increase. The 10- and 20-City Composites (up
8.8% and 9.1%, respectively) also rose more rapidly in November than they had
done in October. The housing market’s strength was once again broadly-based:
all 19 cities for which we have November data rose, and all 19 gained more in
the 12 months ended in November than they had gained in the 12 months ended in
October.
“As
COVID-related restrictions began to grip the economy last spring, their effect
on housing prices was unclear. Price growth decelerated in May and June before
beginning a steady climb upward. November’s report continues that acceleration
in a particularly impressive manner. The National Composite last matched this
month’s 9.5% growth rate in February 2014, more than six and a half years ago.
From the perspective of more than 30 years of S&P CoreLogic Case-Shiller
data, November’s 9.5% year-over-year change ranks near the top decile of all
monthly reports.
“Recent
data are consistent with the view that COVID has encouraged potential buyers to
move from urban apartments to suburban homes. This may represent a true secular
shift in housing demand, or may simply represent an acceleration of moves that
would have taken place over the next several years anyway. Future data will be
required to address that question.
“Phoenix’s 13.8% increase led all cities for the 18th consecutive month. Seattle (+12.7%) and San Diego (+12.3%) took the silver and bronze medals once again. Prices were strongest in the West (+10.1%) and Southwest (+9.7%) regions, with the historically lagging Northeast (+9.3%) also turning in an impressive month.”
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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