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Signs Point to Healthy Spring for Home Sales

The U.S. Census Bureau [1] and the U.S. Department of Housing and Urban Development [2]jointly announced the new residential sales statistics for January 2019 on Thursday. According to the report, the sales of new single‐family houses in January 2019 were at a seasonally adjusted annual rate of 607,000—which is 6.9 percent below the revised December rate of 652,000 and is 4.1 percent below the January 2018 estimate of 633,000.

The median sale price of new houses sold in the month of January this year was $317,200, the average sales price was $373,100. The seasonally adjusted estimate of new houses for sale at the end of January was 336,000. The report pointed out that this represents a supply of 6.6 months at the current sales rate.

Tendayi Kapfidze, Chief Economist at LendingTree [3] indicated that though new home sales missed the estimate, the report suggests a healthy spring season. “January sales missed estimates, but the report is an encouraging one as December sales were revised substantially higher to 652,000 from 621,000. This brought sales for the full year 2018 to 627,000, 2.2 percent higher than 2017 in a year when most discussions were about a slowdown in housing,” Kapfidze said. 

He also stated that "sales may have broken their downward trend as the three-month average moved to the highest since June. Lower mortgage rates may be starting to support sales despite the January decline."

Speaking of affordability, Kapfidze said that the “falling prices are also helping affordability. The median sales price of $317,200 was 3.7% below January 2018. The boost in affordability should support spring sales. Inventory is encouraging. 341,000 homes were available for sale, up 14 percent from January 2018 and months supply of 7.4 will also keep a damper on prices.”

According to Kapfidze, NHS data is “always messy.” He noted that the Census Bureau notes in the release that “it takes 6 months to establish a trend for new houses sold” as they are among the most volatile and revision prone economic data series.

At LendingTree, the 3-month average to balance timeliness with information value is taken into account. “The 3-month average of 629,000 is the highest since June,” he added.

Read the full report here. [4]