In December, the theme for brand new properties was “steady as she goes” – Indignant Bear

In December, the theme for brand new properties was “steady as she goes” in gross sales, worth, and stock tendencies

 – by New Deal democrat

To reiterate my theme from the previous few months, I’ve been taking a look at new and current residence gross sales extra in tandem, with a rebalancing of the market in thoughts. For that to occur we want worth to abate in current properties, to compete with new homes the place costs have been barely declining for over a 12 months. Together with that, we should always see stock of current properties rising, reflecting softness in that market. This morning’s report on new residence gross sales in December continued that metric.

As typical, let me begin with the caveat that new residence gross sales are very noisy and closely revised, which is why I often examine them with single household permits, which lag barely however are a lot much less noisy.

In December new residence gross sales rose to 698,000 annualized, about common for the previous 12 months. The under graph reveals the final seven years, to place the quantity in wider context. Aside from the surge in 2021 after we had 3% mortgage charges, the 2024 common was on par with the very best ranges through the lengthy enlargement previous to the pandemic:

Housing permits have additionally been comparatively steady in 2024, and doubtless will stay so for just a few months extra.

Gross sales lead costs, that are finest seen in a YoY% comparability. The under graph reveals gross sales, single household permits, and median costs of recent properties in that format:

You possibly can see that costs adopted gross sales increased with a few 12 month lag, and settled in to a barely declining development with an identical delay. As proven within the graph, on a YoY foundation in December, the median worth of a brand new residence was 2.1% decrease than it was one 12 months in the past. However because the under graph of non-seasonally adjusted costs reveals over the previous a number of years, the marginally declining development is undamaged:

Lastly, the stock of recent homes made one more 15+ 12 months excessive in December. This is definitely “good” information for the second as a result of because the under long run historic graph reveals, recessions have prior to now occurred after not simply gross sales decline, however the stock of recent properties on the market – which additionally persistently lag – additionally decline (as builders pull again):

In sum, December was a “steady as she goes” month for brand new residence gross sales, with the current tendencies in costs and stock additionally persevering with. As a result of mortgage charges elevated again to 7% prior to now a number of months, I’m anticipating no less than a slight pullback within the subsequent couple of months.

The opposite fly within the ointment to the rebalancing state of affairs is that, as I reported final week, gross sales of current properties elevated prior to now a number of months, and maybe extra importantly, YoY worth will increase have been accelerating. 

In different phrases, whereas the financial information is “good,” when it comes to housing being inexpensive for common People, the sector remains to be out arising brief.