Forecasters were not close to the mark. The Econoday Consensus estimate was 593,000 in a range of 569,000 to 607,000.
Consistently volatile is the well deserved reputation of the new home sales report. December sales of single-family homes plunged 10.4 percent in the month to a far lower-than-expected annualized rate of only 536,000. In a small offset, the prior two months have been revised upward by a combined 14,000 (to 598,000 for November and to 571,000 for October).
The 3-month average is of top importance when looking at this report and here the news is less downbeat. Yet the average is down, 12,000 lower in the month to 568,000 which is the softest reading since June. And the year-on-year sales rate, which had been in the double digits, is now negative, at minus 0.4 percent.
The good news in the report is supply which rose 10,000 to 259,000 and is 10.2 percent higher than a year ago. And the drop in sales has also eased the squeeze with supply relative to sales rising to 5.8 months from 5.0 months.
One factor behind December’s sluggish sales appears to have been prices where the median, in what is more good news, jumped 4.3 percent to $322,500 for a year-on-year gain of 7.9 percent.
The positives aside, this report follows Tuesday’s soft results on the resale side with both pointing to a housing sector that, instead of rising into year-end, faded instead. This report, specifically its implications for broker fees in the housing sector, may be a marginal negative for tomorrow’s fourth-quarter GDP report.
In Search of Good News
It it’s never-ending attempt to put a positive spin on things, Econoday seldom comes up short.
Here’s the most ridiculous spin of the day: “And the drop in sales has also eased the squeeze with supply relative to sales rising to 5.8 months from 5.0 months.”
Econoday has been harping about lack of supply for a long time. If only the plunge had been 50%, supply relative to sales would have jumped even more.
Mike “Mish” Shedlock