New Home Inventory Rises 58% Year-Over-Year

New home sales finished the year less spectacularly than they started it, but the 11.9 percent month-over-month increase was the best since last March. The U.S. Census Bureau and Department of Housing and Urban Development reported that newly constructed homes sold during the month at a seasonally adjusted annual rate of 811,000 compared to a revised rate of 725,000 (from the 744,000 originally reported) in November. The December sales were 14.0 percent below the annual rate of 943,000 in December 2020. Sales rose the following month to 993,000 which proved to be the high point for 2021.

Analysts polled by both Econoday and Trading Economics had forecast the month’s sales at an annual rate of 760,000 units. Predictions from Econoday ranged from 710,000 to 800,000.

On a non-adjusted basis there were 57,000 new homes sold during the month compared to 51,000 in November and 63,000 the prior December. New home sales across all of 2021 totaled 762,000 new homes, a 7.3 percent decline from 822,000 total sales in 2020.

The median price of a home sold during the month was $377,700 and the average was $457,300. In December 2020, the relative numbers were $365,300 and $401,700.

Inventories have improved substantially this year. In December 2020 only 299,000 new homes were on the market, a 3.8-month supply. At the end of the year the inventory had risen to 403,000 available new homes, an estimated 6.0-month supply. However, only 39,000 of those homes were completed and construction on a quarter was only in the permitted stage. At the end of November, the inventory was estimated at 6.6 months at the then current sales pace.

Sales in the Northeast in December were at a seasonally adjusted rate of 27,000 units, down 15.6 percent from November and 34.1 percent below the December 2020 level. The Midwest saw sales increase to an annual rate of 86,000, up 56.4 percent year-over-year but a 23.2 percent monthly decline.

The South saw a 14.9 percent gain for the month although the 456,000 annual rate was 17.5 percent below that in December of the prior year. Sales in the West, at a 242,000 rate, were up 0.4 percent and 2.1 percent from the two earlier periods.