New home sales were at a seasonally adjusted annual rate of about 592,000 in November – an increase of 5.2% compared with about 563,000 in October and an increase of 16.5% compared with about 508,000 in November 2015, according to estimates released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
The median sales price of new single-family home sold in November was $305,400; the average sales price was $359,900.
As of the end of November, there were about 250,000 new homes available for sale in the U.S. – about a 5.1-month supply at the current sales rate.
Most of the increase was due to a massive, 43.8% increase in the Midwest region. The West didn’t fare bad, either, with a 7.7% increase.
Meanwhile, new home sales were flat, month over month, in the Northeast and were down 3.1% in the South.
Year over year, new homes sales were up in all four regions.
Corresponding with the increase in new home sales, builder confidence recently jumped seven points to reach a score of 70 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). It was the highest reading since July 2005.
“This notable rise in builder sentiment is largely attributable to a post-election bounce, as builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability,” says Ed Brady, chairman of NAHB, in a statement. “This is particularly important, given that a recent NAHB study shows that regulatory costs for home building have increased 29 percent in the past five years.”
“Though this significant increase in builder confidence could be considered an outlier, the fact remains that the economic fundamentals continue to look good for housing,” adds Robert Dietz, chief economist for NAHB. “The rise in the [index score] is consistent with recent gains for the stock market and consumer confidence. At the same time, builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.”
With regard to the spike in new homes sales, Brady says “builders expect more of the same next year.
“A key to continued growth in 2017 will be to ensure that prospective, qualified first-time home buyers have access to affordable home loans,” he says.
Dietz adds that “a growing economy and solid job growth” will help fuel new home sales in 2017.
“Moreover, builder confidence has risen on anticipation of reductions in regulatory costs, which is good news for home buyers and renters,” he adds. “However, the pace of construction will continue to be restricted by shortages of lots and labor in some markets.”