New home sales rose 3.4 percent month over month in December 2018 to 621,000 according to the latest new home sales data released by the Census Bureau and the U.S. Department of Housing and Urban Development.
Looking at the estimated new homes sold in 2018, the report indicated that 622,000 homes were sold during the year, growing 1.5 percent above the 2017 figure of 613,000.
Despite the month-over-month increase in December, experts said that home sales still indicated a downward trend with the report noting that compared to December 2017, new home sales were 2.4 percent below estimates.
"New home sales were lower than a year ago, much like other housing indicators that performed poorly at the end of 2018," said Danielle Hale, Chief Economist, realtor.com. "Additional housing inventory is also evidence of a cooler start to the 2019 housing market."
"The narrative for most of last year was of a weakening housing market," said Tendayi Kapfidze, Chief Economist, LendingTree. "The peak in sales was in November 2017 at 712,000 and have been trending lower since as high mortgage rates pressured sales and prices."
The report indicated that the median sales price had also decreased with the sale price of $318,600 in December 2018, 7.2 percent below December 2017’s $343,300. The for sale inventory in December was 344,000 units representing a supply of 6.6 months at the current rate of sales.
According to Kapfidze, the increase in housing inventory also suggests that "there should be continued price weakness, which is positive for affordability."
In fact, increased supply with the lower mortgage rates should provide relief to the housing market this spring buying season.
"Fortunately, mortgage rates have drifted much lower and now sit just below year-ago levels," Hale said. "Some housing indicators, such as mortgage applications and pending home sales, are starting to show signs of life, suggesting that some thawing could be ahead as we approach the spring buying season."