A leading indicator showed that new Home sales, which account for about 10% of the U.S. housing market, rebounded in December for the first Time in five months, but the rebound trended less than expected as home sale prices soared to a record high. The U.S. housing market has previously been the bright spot supporting the post-Epidemic economic recovery.
Data released by the U.S. Department of Commerce on Thursday, Jan. 28, showed that U.S. new home sales rose 1.6 percent quarter-over-quarter in December 2020, the first gain since July 2020, and still significantly weaker than the expected 3.2 percent increase.
Annualized U.S. new home sales totaled 842,000 in December, near the low since June 2020 and weaker than the expected 868,000.
The previous value for November was also revised down to 829,000 from 841,000, a figure that had plunged 11 percent from a year earlier before the revision, which financial blog Zerohedge said was the second-largest monthly decline since 2015.
The U.S. new home market cooled for four consecutive months from August to November last year, and gradually slipped from the high temperatures seen since 20006. the volatile figure was then back below the 1 million round figure mark from September.
However, the annualized total of new single-Family home sales for all of 2020 rose to 811,000, the best since 2006.
Fed Chairman Jerome Powell also said at a post-FOMC press conference Wednesday that real estate remains a bright spot in the U.S. economy despite slowing growth in other sectors, and that “the residential market has fully recovered from the downturn, in part because of lower mortgage rates (driving demand).”
Specifically, the median sale price of a new home rose 8% year-over-year in December to a record high of $335,900. Of these, 15 percent of new homes sold were priced above $500,000, slightly lower than the 17 percent share in November.
The number of homes that have not yet begun construction but have sold increased to 277,000 from the previous value of 256,000, highlighting the strong demand side of the equation; the number of homes for sale also increased to 302,000, the highest since May 2020.
At the current pace of sales, new homes for sale will take 4.3 months to clear inventory, up from 4.2 months in November and 3.6 months in October, but less than 5 months is still a sign of tightening on the supply side.
In the four major geographic divisions of the United States, the most expensive selling price of the West, as well as the Midwest new home sales growth, the Midwest is a surge of 30.6%, while the largest geographic area of the South sales fell to the lowest since May 2020.
The analysis pointed out that although the U.S. new and manufactured housing market rebounded across the board in December, with the new housing starts index rising to the highest in more than a decade, the lack of affordable housing and a weak job market could begin to limit the momentum of the housing market recovery.
The latest data on Thursday showed that the number of first-time jobless claims in the U.S. fell to 847,000 last week, compared with 875,000 expected and 900,000 previously, in the week ended Jan. 23. But the number of continuing claims for unemployment benefits remained at a high of 4.77 million.
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