U.S. New-Home Sales Fall to Five-Month Low, Missing Forecast

(Bloomberg) -- Sales of new U.S. homes cooled for a third month in December, signaling a potential pullback after purchases climbed to some of the best levels in more than a decade amid lower borrowing costs and a solid labor market.

Single-family home sales fell 0.4% to a 694,000 annualized pace, the weakest since July and below all economist estimates in Bloomberg’s survey, while the November figure was revised down to 697,000, government data showed Monday. The median sales price edged up 0.5% from a year earlier to $331,400.

The report capped a year in which an estimated 681,000 homes were sold, up more than 10% from 2018 and the best since 2007, according to the government’s figures.

Key Insights

• Despite signs of softening, new-home sales remain near post-recession highs amid lower borrowing costs following three Federal Reserve interest-rate cuts last year. Recent strength, however, has boosted residential construction, and in turn helped contribute more to gross domestic product.
• 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.

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• Purchases of new homes fell in the South, the largest region, and the Northeast, while they climbed in the Midwest and West.
• Economists in Bloomberg’s survey projected an annualized pace of 730,000 new-home sales for November. Estimates ranged from 700,000 to 764,000.
• There were signs that the inventory squeeze may get some relief. The supply of homes at the current sales rose to 5.7 months from 5.5 months in the prior 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.
  

--With assistance from Jordan Yadoo.

To contact the reporter on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Ana Monteiro

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