New home sales declined by 2.2 percent to a seasonally adjusted annual rate of 307,000 units in December according to data jointly released by the U.S. Census Bureau and the Department of Housing and Urban Development. November sales were revised down from the original estimate of 315,000 to 314,000. The recent sale pace was 7.3 percent lower than the 331,000 reported in December 2010.
The non-seasonally adjusted median home price in December was $210,300 and the average price was $266,000. One year earlier the respective prices were $241,200 and $291,700.
There were 157,000 new homes for sale at the end of December compared to 158,000 at the end of November and 190,000 in December 2010. The median time the homes have been on the market is 6.7 months, down from 7.3 months in November and 7.9 months a year ago. Homes available for sale represent a 6.1 month supply at the current pace of sales, up from 6.0 months in November and down from 6.9 months in December 2010.
New Home Sales Data
Lou Brien, market strategist for DRW Trading Group in Chicago said of the new home sales report, "It certainly missed expectations and notably it missed expectations on sales even though the median price fell $5,000 from November and is down $31,000 from last December. But in the bigger picture we're bouncing along. It's not necessarily deteriorating anymore but that's not good at this sales rate."
He said that some recent housing data has been better than expectations, but he pointed to the recent revision of five years of sales data by the National Association of Realtors®. "With this data coming in a little bit worse than expected it may have a little bit more of an effect on the market than if the other data had just been sort of static."
William Larkin, Portfolio Manager, Cabot Money Management in Salem, Massachusetts said that while sales were lower, they seem stable. "From the standpoint of an investor, the box has been checked, this is a neutral number. Not good, but not alarming. This is secondary on everyone's radar today, as everyone is looking into the sales figures in all the earnings reports."
David Sloan, Economist, IFR Economics, a unit of Thomson Reuters said the 307,000 sales pace was well below a consensus estimate of 320,000. "The data comes as a disappointment with most recent housing indicators having been positive. While the balance of evidence remains that the housing sector is seeing some response to low mortgage rates, this data serves as a reminder that the sector is still weak and we cannot yet be confident of a strong and sustained boost to GDP from housing in 2012. Prices were mixed on the month, but sharply negative year/year data shows that the picture is on balance negative."
