New home sales soared +12.4% in November.
November New Home Sales Bounced Up +12.4%.
After the mild increase of +0.4% in October’s new home sales, November’s +12.4% m/m jump in new home saleswas music to homebuilders’ ears.
According to the US Census Bureau, there were 402.000 new homes posted for sale n November. These 402,000 new for-sale homes for sale accounted for a supply of 6.5 months.
Despite this welcome rise, this +12.4% m/m jump to a seasonally adjusted rate of 744,000 new homes sold in November 2021 remained -14% lower than the November 2020 estimate of 865,000 sales.
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Median Sales Price of New Homes Up
The median sales price of new homes sold in November was $416,900, a month-to-month increase from $407,000 in October 2021. The average sales price was $481,700, up from October’s average sales price of $477,800.
Impetus for New Home Sales in November?
George Ratiu, the manager of economic research with realtor.com, tipped his hat to low mortgage rates and low inventory of existing homes while supply of new homes registered a slight uptick in November.
Ratiu said, “New home sales advanced for the third consecutive month in November, as still-low mortgage interest rates motivated buyers to close before the winter holidays. With tight inventory for existing homes frustrating many buyers, low interest rates have given many the leeway in their budget to consider new homes.”
Ratiu added, “Strong demand for housing keeps the homebuilders’ outlook for the next six months upbeat.”
Cautionary Winds Blowing Towards New Home Sales in 2022
The dearth of existing home inventories, supply chain disruptions that kick up material costs and the resurgence of staggering lumber costs may soon begin weighing heavily on new home prices. Such weight could well stimulate homebuyers’ concerns around affordability sooner rather than later since homebuilders simply pass along to increasing costs to new home buyers.
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(Last week, we published an article on soaring lumber prices that are now double what they were at the beginning of November. The US Commerce Department recently announced it would double import duties on Canadian lumber in 2022.)
Rising interest rates are due to take center stage in 2022 as the Federal Reserve makes good on its announcements to scale back its bond buying program by March and to institute three increased mortgage rate adjustments during the new year.
Realtor.com anticipates that new home sales will slow due to potential buyers having less purchasing power in light of higher interest rates.
Perhaps, just perhaps, homebuilders may lower or at least limit how much they raise new home prices in 2022 due to rising interest rates, despite near-certain increased costs from materials, labor and supply chain disruptions plus severe inventory shortages.
Thanks to Inman and CNBC.
