Strong New Home Sales a Moving Target Thanks to Revisions

November was another one of those months for new home
sales when the topline numbers look terrific. And then you take a second look.

The U.S. Census Bureau and Department of Housing and
Urban Development reported on Thursday that new home sales surged 12.4 percent
from October to November. However, the seasonally adjusted annual rate of sales
was at the lower end of analysts’ expectations at 744,000 and was 14.0 percent below
the November 2020 estimate.

The strong monthly gain arises from two straight
months of significant downgrades to the prior period’s estimate. September
sales were reported at an annual rate of 800,000 only to be revised to 723,000.
This month the 745,000 October estimate turned into 662,000 units.

Analysts polled by both Econoday and Trading
had a consensus forecast of 770,000 sales. The Econoday
estimates ranged from 740,000 to 785,000 units.

On a non-adjusted basis there were 53,000 newly
constructed homes sold during the month compared to 51,000 in October. With one
month remaining, 2021 sales total 709,000 compared to 758,000, a 6.5 percent

The median sale price of a new home in November was
$416,900 and the average was $481,700. The respective sales prices in November
2020 were $350,800 and $396,100.

At the end of the reporting period there were 402,000
new homes available for sale. This was estimated to be a 6.5-month supply at
the current pace of sales, up from 4.0 months in November of 2020 but down from
7.1 months in October of 2021. Of the homes in the inventory in November, only
39,000 were ready for occupancy and construction had not begun on more than
one-quarter of the total.

Analyst Danushka Nanayakkara-Skillington writes in the National Association
of Home Builders’ (NAHB) Eye on Housing blog that, “Sales are increasingly
coming from homes that have not started construction, with that count up 75.4
percent year-over-year (not seasonally adjusted). These measures point to
continued gains for single-family construction ahead.

New home sales rose 15.6 percent in the Northeast
compared to October and 8.8 percent year-over-year while they declined 25.4
percent and 44.8 percent in the Midwest. The South posted a 2.7 percent gain
for the month, but sales lagged the prior November by 21.2 percent. Sales in
the West surged 53.2 percent in one month and were 14.2 percent higher on an
annual basis.

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