Global| Dec 27 2006New Home Sales Gain 3.4% in November; Prices Also Up, Inventories Down
Summary
New home sales rebounded 3.4% in November to 1.047 million, almost reversing October's decline. October sales were revised higher by 9,000. The Action Economics consensus forecast called for a more modest increase to 1.020 million [...]
New home sales rebounded 3.4% in November to 1.047 million, almost reversing October's decline. October sales were revised higher by 9,000. The Action Economics consensus forecast called for a more modest increase to 1.020 million (see Haver's AS1REPNA database). November sales were up in the Northeast, the Midwest and the West, but still down in the South.
Home prices also rose, with the median gaining 3.2% to $251,700, the highest level since April's $257,000, which is the record high. October prices were revised lower, but those in September were increased.
The November sales pushed down builders' inventories from 553,000 at the end of October to 545,000, making a fourth consecutive monthly decline. At the current sales pace, this level represents 6.3 months' sales. While this is well above the year-ago amount of 4.9 months, it is also well down from July's peak of 7.2 months.
Thus, the housing sector seems to be holding in pretty well. After the substantial "bubble" that began in the middle of 2003, a consolidation was to be expected. But current conditions indicate some stabilization, suggesting that "consolidation" may be an appropriate description, not "implosion". Flexible pricing and sensitive interest rates have helped. In fact, last week's cost for 30-year fixed-rate mortgage commitments is down more than 10 basis points from November's 6.27% shown in the table, giving a total reduction of about 60 basis points from July's high. Here's hoping the New Year extends this performance.
| US New Homes, Seas Adj | Nov 2006 | Oct 2006 | Sept 2006 | Nov 2005 | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|---|
| Total Sales (SAAR, 000s) | 1,047 | 1,013 | 1,053 | 1,236 | 1,280 | 1,201 | 1,091 |
| Median Price (NSA, $) | 251,700 | 243,800 | 225,500 | 237,900 | 234,208 | 217,817 | 191,383 |
| Inventory: Months' Supply | 6.3 | 6.7 | 6.6 | 4.9 | 4.4 | 4.0 | 3.8 |
| FHLMC Mortgage Rate (%) | 6.27 | 6.36 | 6.41 | 6.33 | 5.86 | 5.84 | 5.82 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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