US: Western region leads new home sales up 17.5% in December

New single-family home sales increased 17.5% in December to an annualized rate of 329,000 units. This is the highest rate of sales since April (414,000saar), when sales could still qualify for the home buyer tax credit. The December data is a nice pickup in sales which had remained depressed since the tax credit’s expiration, though there are reasons to be cautious about the December increase since the growth in sales was concentrated in the West where special factors may have boosted the data. New home sales soared 71.9% in the West to an annualized rate of 110,000 units, basically matching the peak in sales seen during the nationwide tax credit (109,000saar), while sales were basically unchanged (+1.4%) in the other three reported regions. Sales in California—responsible for a portion of the jump in sales in the West—may have been boosted ahead of the end of a statewide home buyer tax credit. Contracts for new homes sales had to be executed before the start of the New Year to qualify for the statewide tax credit, which likely led to a run-up in sales in December. December new home prices were up 8.5% on a year-ago basis after being reported down 1.5%oya in November. Prices were lifted by the increased sales in the West, where prices are higher than the national average. The measures of inventories declined in December, reflecting the increased sales; the amount of new homes for sale declined from 195,000 in November to 190,000 in December and the months’ supply for new homes declined from 8.4 to 6.9 months (the lowest level since April).

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