Sales of new U.S. single-family homes jumped by over 10 percent over the month in December to a nine-month high, boosted by a shortage of previously owned houses on the market.
New home sales rose 11.9 percent to a seasonally adjusted annual rate of 811,000 units last month, the highest level since March, the Commerce Department said in a Jan. 26 release (pdf).
While that’s a substantial bump from November’s annual rate of 725,000 units, it’s around 14 percent lower than the December 2020 figure of 943,000. A total of 762,000 new homes were sold in the United States in all of 2021, compared to 822,000 in 2020, a decrease of around 7.3 percent.
New home sales account for a little over 10 percent of all U.S. home sales, with existing home sales totaling 6.12 million units in 2021, according to the National Association of Realtors (NAR).
Overall homebuyer demand in the United States has been buoyed by historically low mortgage rates, while a shortage of previously owned housing stock has helped underpin new home sales.
The inventory of unsold existing homes fell to an all-time low of 910,000 units in December, according to NAR. This represents around 1.8 months of stock at the current monthly sales pace—also a record low.
“December saw sales retreat, but the pull back was more a sign of supply constraints than an indication of a weakened demand for housing,” Lawrence Yun, NAR’s chief economist, said in a statement. “Sales for the entire year finished strong, reaching the highest annual level since 2006.”
Yun expects existing-home sales to slow somewhat in the months ahead as mortgage rates rise.
“I also expect home prices to grow more moderately by 3 percent to 5 percent in 2022, and then similarly in 2023 as more supply reaches the market,” he predicted.
Home prices have surged in the face of strong buyer demand, with the S&P CoreLogic Case-Schiller U.S. National Home Price NSA Index (pdf), a measure of home prices in the United States, rising 18.8 percent in annual terms in November, down only slightly from the 19 percent gain the prior month.
A separate house price index compiled by the Federal Housing Finance Agency (FHFA) showed a similar 17.5 percent annual rise in U.S. home prices between November 2020 and November 2021.
“House price levels remained elevated in November, but the data indicate a pivot,” Will Doerner, supervisory economist in FHFA’s Division of Research and Statistics, said in a statement.
“The last four months reflect average gains of 1.0 percentage point, down from the larger prior changes during the spring and summer months. This new trend is a welcome shift but still twice the monthly average we have seen in the last 20 years, which echoes concerns about access and affordability in housing markets,” Doerner added.