US New Homes Sales Nov: 744K (est 770K; prev 745K; prevR 662K) - New home sales come in under expectations due to huge October revisions

US New Homes Sales Nov: 744K (est 770K; prev 745K; prevR 662K) 

- US New Home Sales (M/M) Nov: 12.4% (est 3.4%; prev 0.4%; prevR –8.4%)

Microsoft Word - newressales_auto_text.docx (census.gov)

As always big h/t to Bill McBride (@calculatedrisk) for the charts and helpful analysis.  He's a go to follow on Twitter for all things housing.  

After October numbers were revised down significantly (by over -10%), November new home sales got back to where October was originally reported, they came in well above expectations in terms of m/m growth but well under in terms of number of houses sold.  Specifically, October was revised down from 745k homes sold on a seasonally adjusted annual rate (SAAR) to 662k and November came in at 744k (estimates were for 770k)  As we're lapping the start of the pandemic boom, y/y down significantly (-14.0%).  But we continue to remain well above 2019 levels.  

Median prices, which had increased to record high levels in October moved higher to $416.9k. Average selling prices also increased, to $481.7k also a new record high.  Over half of new homes (56%) are now over $400k a record high.  Bill McBride - "For the first time ever, essentially no new homes sold were under $200K in November 2021.  This is down from 56% in 2002.  In general, the under $200K bracket is going away." The median price is up 19% y/y, and the average up 22%.

Inventories, discussed more below, increased again this month, which is unusual for this time of year, putting months of supply at 6.5 months.  This is up from the all time low of 3.5 months in October 2020, and is above the "normal" range of 4-6 months, but the makeup of that inventory remains an issue as we'll discuss below (spoiler: there remains not much supply of finished product).

Overall, the market appears to remain very strong with sales still really only held back by supply (and higher prices which are a function of supply).  That "holding back" is evidenced by the growing backlogs discussed below.  Unadjusted outside of last year, this was still the most sales since 2006 (see graph above).

In breaking down that months of supply number, we continue to see a wide separation between supply of homes that have been completed (which at 0.6 months are just above record lows (the red area)) versus supply not yet started (green) at 1.8 months (at record highs) or under construction (blue) which is around 4.1 months (well above normal levels).  So while there are more than a normal amount of homes "for sale" there's a very low number that actually exist today, which indicates a continuing backlog of homes for homebuilders to work through.  The 363k homes that are not started and under construction is a record backlog.  

That 1.8 months of homes not started represents a record 110k homes that have not been started.  There are only 39k completed new homes for sale which is barely above the record low of 33k from earlier this year.

Regionally, a lot of dispersion again this month with the West leading up +53.2% m/m, NE up 15.6%, South up 2.7% while the MW fell by -25.4%.  Y/y MW and South are down (-44.8 and -21.2% respectively) while NE and W are up (8.8 and 14.2% respectively).  Full table below.  

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