Selling of new homes declines
But December’s median price up
WASHINGTON — U.S. sales of newly built homes fell 0.4% in December, cooling slightly after low mortgage rates fueled gains for much of 2019.
The Commerce Department said Monday that new single-family houses sold at a seasonally adjusted annual rate of 694,000 last month, while the November figure was revised down to 697,000. But for all of 2019, sales climbed 10.3% to 681,000, the highest total since 2007 when 776,000 new homes were sold as the housing bubble was beginning to deflate ahead of the recession.
Last year’s gains were driven entirely by new homes purchased in the South and West. Sales of new homes slumped in the Northeast and Midwest in 2019.
December’s median new-home sales price was $331,400, up 0.5% from a year ago.
Despite signs of softening, new-home sales remain near post-recession highs amid lower borrowing costs after three Federal Reserve interest-rate cuts last year.
Fed officials will hold their latest policy meeting this week feeling broadly
satisfied with where interest rates are and with seemingly no inclination to change them anytime soon.
Since they last met in midDecember, Fed officials have presented a nearly unified front in support of keeping rates unchanged, possibly for the rest of this year.
“My expectation is we could go through the entire year without rate changes,” Charles Evans, president of the Federal Reserve Bank of Chicago, said this month.
Economic projections that the Fed released after its meeting showed that officials collectively expected to leave rates unchanged throughout this year and to raise them once in 2021 and once in 2022. And Fed Chairman Jerome Powell indicated at his news conference last month that the bar is high for any rate increases. Powell said he “would want to see … a significant move-up in inflation that’s also persistent before raising rates to address inflation concerns.”
Other recent reports have indicated fresh strength in housing. Existing-home sales, which account for about 90% of U.S. housing, jumped in December to the best pace in nearly two years amid the leanest inventories on record. Pending home sales also have remained resilient.
There were signs in Monday’s Commerce Department report that the inventory squeeze may get some relief. The supply of homes at the current sales pace rose to 5.7 months from 5.5 months in the previous month, while the number of properties sold for which construction hadn’t yet started increased to a six-month high of 214,000.
New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close.
Changes in the seasonally adjusted data are volatile and have a wide margin of error. There’s a 90% chance that the monthly percentage change was between a 15.5% decline and a 14.7% increase, according to the U.S. Census Bureau. The report is published jointly by Census and the Department of Housing and Urban Development.