US new home sales rose 3.7% in December 2018
US new home sales grew to its highest number in seven months.
The US housing market is showing improvement as new home sales increased at the end of 2018. The US Commerce Department released the report that shows that new home purchases reached the highest number since May 2018.
US new home sales:key figures
| Sales of new homes | +3.7% |
| Median sales price | $318,000 |
| Single-family home sales | +1.5% |
| Annual rate | 610,000 units |
Why did new home sales increase in December?
New home sales likely increased because of mortgage rates falling since early November 2018. Sales of new homes rose 3.7% to a seasonally adjusted annual rate of 621,000 units. Single-family home sales also grew by 1.5% in 2018. While many figures climbed, the median sale price of new homes dropped. The median sale price of new homes decreased 7% from December 2017 to $318,000.
US new home sales statistics also show that purchases differed by region in the US. Sales in the southern states increased 5.0%, while they rose 1.4% in west. New home sales jumped 44.8% in the northeast, but declined 15.3% in midwestern states.
What do the new home sales mean for the US housing market?
Though new home sales were high, there was delayed information about December’s new home sales because of the US government shutdown. Because of the postponement, the statistics are based on smaller samples, so it’s hard to gauge the meaning of the results until January’s US home sales report is released this week.
Ian Stephenson, chief economist at Pantheon Macroeconomics, was optimistic about the housing market improving in the spring.
‘Sales are recovering from the 549K low in October, when activity likely was depressed by Hurricane Michael. The increase in mortgage applications last fall is starting to work through the numbers, and we expect further increases in sales - with an even-money chance of new cycle highs - in the spring,’ said Stephenson.
Stephenson also believes that the new home sales will increase construction activity, which will in turn boost the US gross domestic product (GDP).
‘Rising new home sales trigger increased construction activity, so we think the residential investment component of GDP will rebound by the second quarter at the latest,’ added Stephenson.
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