New single-family home sales experienced continued growth in November, with the number of new home sales increasing to 490,000 units on a seasonally-adjusted annual basis, up 9.1 percent from year ago levels, the U.S. Census Bureau and HUD reported Wednesday.
New single-family home sales also grew 4.3 percent from October, when houses fitting this category sold at a rate of 470,000 units on a seasonally adjusted annual basis.
"The increases in sales and inventories signifies continued builder optimism and customer demand growth. However, the levels remain disappointing given the amount of pent up demand and the low level of turnover in existing home sales. Most new home sales are to existing home sellers so the weak sales of existing homes and low inventories of existing homes produces fewer potential new home buyers," said David Crowe, Ph.D., NAHB's Chief Economist and SVP.
He continued, "On the positive side, home equity is up, employment continues to increase and mortgage rates remain low by historic standards. On the negative side, few first time home buyers are in the market as credit standards remain restrictive and young individuals remain living with their parents. Existing home owners are reluctant to sell when the inventory of existing homes remains low, a double-edged retardant to a more robust new and existing home market."
The median sales price of a new home in November hovered at $305,000, while the average sales price came in at $374,900.
By the end of November, the nation’s new home inventory maintained a sales rate of 5.7 months, creating a situation that is preferable to sellers, but somewhat of a wet blanket for homebuyers in the market for the first time.
"First-time homebuyers continue to be out of luck,” said Tim Rood, chairman of The Collingwood Group, a government policy and advisory firm.
“Inventory for the start up buyer is anemic and multifamily construction is through the roof as builders cater to renters during a time when household formation is spiking. The November report on new home sales shows that just over 10 percent of new home sales were under $200,000 sales price. Without first time homebuyers you can't have move up buyers. We have to find a way to free up existing home inventory on the lower end (price) but negative equity is disproportionately affecting lower priced homes.”
News of stronger single-family home sales was somewhat mitigated by the government’s announcement that it had adjusted its earlier estimate for October new home sales, pushing that figure downward to 470,000 units.
"New home sales are likely to continue their modest rise into 2016 as economic signals remain positive. However, sales and inventory of existing homes need to advance in order to release current home owners to buy a new home. Without this elementary feed to housing demand, the market cannot advance significantly," Crowe said.