New Home Sales in December Fall Sharply

New home sales fell 7.3 percent in December to an annual pace of 369,000, the sharpest monthly drop in almost two years, the ""Census Bureau and Department of Housing and Urban Development"":http://www.census.gov/construction/nrs/pdf/newressales_201212.pdf reported Friday. Economists surveyed by Bloomberg expected the report to show a sales rose to 388,000. Both the average and median price for a new home rose in December, each recording the sixth straight month of year-over-year improvement.

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Sales for September, October, and November were revised higher, with the November sales pace reported as 398,000, up from the originally reported 377,000. The large revision suggests December sales were accelerated to November, causing the December figures to plunge.

The monthly drop in sales was the largest since February 2011, when sales fell 11.4 percent. Nonetheless, December 2012 sales were up 8.8 percent over December 2011.

There were, according to the report, 367,000 new homes sold in all of 2012, a 19.9 percent gain over 2011, when sales totaled 306,000.

The government report on new homes came on the heels of the report Tuesday from the ""National Association of Realtors"":http://www.realtor.org/ (NAR) that ""existing-home sales"":http://www.themreport.com/articles/existing-home-sales-slip-in-december-prices-rise-2013-01-22 fell 1.0 percent in December. Though labeled for the same month, the two reports are not strictly comparable. The existing home sales report tracks completed transactions while the government’s new home sales report is based on contracts. The parallel report from the National Association of Realtors--its Pending Home Sales Index--will be issued Monday.

Unlike the existing home sales report, the new home sales report showed an increase in the inventory of unsold homes at the end of the month: 151,000, the highest level in a year.

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According to the NAR, the supply of existing homes for sale fell in December to 1.82 million, the lowest level since January 2001.

The Census-HUD data represent a 4.9 month supply of homes for sale, the highest since March. The NAR data show a 4.4 month supply of homes for sale, the lowest level since May 2005.

The median price of a new home rose in December to $248,900, a 1.3 percent month-over-month increase made larger with a downward revision in the median price of a new home in November to $245,600 from the originally reported $246,000. The median price of a new home was revised up for September and October, as well.

The median price in December was up 13.9 percent over December, the 10th yearly increase in the last 11 months.

The average price of a new home in December was $304,000, a 4.9 percent increase from November’s revised $289,000. The average sales price of a new home in November was originally reported at $299,700. The average price of a new home in December was up 15.8 percent over December 2011, also the 10th year-over-year increase in the last 11 months.

The report covered the same month in which Census and HUD said builders completed 535,000 single family homes. The National Association of Home Builders’ Housing Market Index (HMI), a measure of builder confidence, was 47 in December, up two points from November. The buyer traffic component of the HMI rose one point to 36, the highest level since April 2006.

Homes with price tags of more than $300,000 represented 19 percent of December sales, up from 16 percent in November. Homes priced below $200,000 represented 29 percent of December sales, down from 34 percent in November. The changing price points--higher priced homes represented 13 percent of October sales--could encourage increased construction activity.

Regionally, sales dropped in three of the four Census regions, increasing only in the Midwest to 57,000 from November’s 47,000. Sales fell 19,000 in the South to 208,000 in December, and 10,000 in each of the West (to 80,000) and the Northeast (to 24,000).

_Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:40 a.m. and again at 9:40 a.m. Eastern time._