Sales m/m: 17.5%, forecast 3.5%, pr. 5.5% (Nov)
New home sales surprised forecasts jumping 17.5% in December, larger than the 3.5% expected, and at an annual rate of 329K, it was about 49K more than the downwardly revised annual pace in November. That's a positive sign for the US housing market, an even though its the best reading since April, in absolute terms, its still a pretty weak level as we can tell from the graph of new home sales above.
There is also growing concern about a double-dip in housing as prices have turned negative and recent data like the S&P/Case Shiller 20-city house price index hit its biggest annual decline in a year.
From Financial Times: US house prices fall for fifth month
US home prices fell for the fifth consecutive month in November, dropping to the lowest level since June 2009 and raising fears that a double dip in the housing market could deal a blow to the economic recovery.
House prices in the 20 biggest US cities fell by 0.5 per cent on a seasonally adjusted basis, according to the S&P/Case Shiller home price index. Compared with the same month a year ago, prices are off by 1.6 per cent, marking the steepest annual decline in nearly a year.
With these numbers more analysts will be calling for a double dip in home prices, said David Blitzer, chairman of S&P's index committee.
Still, today's new home sales report can be taken as an encouraging report as inventories of new homes fell to 6.9 months at the current sales rate from 8.4 months in the prior month, also the lowest since April.
If we look at the full year, new home sales totaled 321K, down 14.4% compared to 2009 and also the worst year on records dating back to 1963.
The median price of new homes climbed to $241,500 in December from $215,500 in November, which was a pretty big jump. It's existing homes however driving down housing prices in the US. New homes are competing for new foreclosed homes which carry lower prices than new constructions.
Previous Release FXTimes Commentary (12/23): The US housing market continues to signal weakness. In November new home sales increased by 5.5% to an annual pace of 290K. That was lower than forecasts of a 6.0% increase to 300K. Also, October's reading was revised lower as well. Uncertainty about the direction of home price has discouraged buying. High unemployment is turning people away from the market as well. And even those that do want to buy a home, they can have trouble finding financing.