January New Home Sales Tumble, Prices Dip

The U.S. Census Bureau and the Department of Housing and Urban Development reported Thursday morning that sales of new homes in January decreased to a seasonally adjusted annual rate of 607,000, a drop of 6.9% from the revised December rate of 652,000 and a decrease of 4.1% compared with the January 2018 rate of 633,000. The consensus estimate from a survey of economists expected a rate of around 612,000. The December 2018 rate was revised upward by 31,000.

Wintry weather and a partial government shutdown through much of January are likely responsible for a significant portion of the sharp decline in new home sales. The large upward revision in December sales made January sales look even worse.

At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in January slipped by $1,400 to $317,200, and the average sales price also fell month over month by $3,900 to $373,100. At the end of January, the number of new homes for sale on a seasonally adjusted basis totaled 336,000, down by 8,000 month over month, and represented a supply of 6.6 months at the current sales rate.

In January, 45% of the estimated 45,000 monthly total was sales for homes priced at less than $300,000. The percentage is unchanged from December.

Sales of homes priced between $300,000 and $399,999 rose by six percentage points to 29% of all sales. Sales of homes in the range of $400,000 to $499,999 fell by three points to 11% of the total, and sales also fell by 3% for homes sold in a range of $500,000 to $749,999. Home sales for properties priced above $750,000 accounted for 5% of all new home sales in January, up by one point compared with December.

On a seasonally adjusted basis, new home sales are down 4.1% year over year nationally. In the South new home sales rose 6.2%; in the Northeast, sales are down more than 11%; in the Midwest sales are down nearly 42%; and in the West sales fell by 3.2%.

On a non-seasonally adjusted basis, homes sold in the South fell by 4,000 to 25,000 month over month in November. Home sales were also down by 2,000 to 3,000 in the Midwest, while sales in the Northeast fell from 3,000 to 2,000. Sales in the West rose by 4,000 to a total of 14,000.

The for-sale inventory was down by 1,000 in the Northeast to 27,000 and unchanged in the Midwest at 42,000. In the South new homes for sale also fell by 1,000 to 176,000, while supply in the West dropped by 3,000 to 91,000.

It’s worth noting that the monthly totals are subject to multiple revisions and those revisions are often significant.