U.S. New Home Sales Fell in December -- Update

FeaturesDow Jones Newswires

U.S. new-home sales fell in December, a sign that the lack of inventory and fast-rising prices may be weighing on buyer demand in one segment of the housing market.

Purchases of newly built single-family homes -- a relatively narrow slice of all U.S. home sales -- decreased 9.3% to a seasonally adjusted annual rate of 625,000 in December, the Commerce Department said Thursday. Economists surveyed by The Wall Street Journal had expected sales to fall 7.2% in December to a 680,000 annual rate.

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Sales rose 8.3% in 2017 from the prior year.

Despite solid growth in sales in 2017, sales still remain well below the elevated levels seen before the 2007-09 financial crisis and recession.

In the wider housing market, inventory has been tight recently -- in part because of lackluster home construction -- and that has contributed to a run-up in home prices. The median sale price for a new home sold in December was $335,400. At the current sales pace, there was a 5.7-month supply of new homes on the market at the end of December.

Sales of previously owned homes, which represent the bulk of the U.S. market, fell in December but rose in 2017 as a whole to their highest level since 2006, the National Association of Realtors said Wednesday.

Write to Sarah Chaney at sarah.chaney@wsj.com and Sharon Nunn at sharon.nunn@wsj.com

WASHINGTON -- New home sales in the U.S. lost steam in December but wrapped up a solid year in a segment of the housing market that has faced tight inventory and fast-rising prices.

Purchases of newly built single-family homes -- a relatively narrow slice of all U.S. home sales -- decreased 9.3% to a seasonally adjusted annual rate of 625,000 in December, the Commerce Department said Thursday, a sharper fall than economists surveyed by The Wall Street Journal had expected.

Economists say a post-hurricane bounceback in sales drove strong activity through the fall, and some of the December pullback could mark a reversal from those gains.

Sales rose 8.3% in 2017 from the prior year to 608,000, the highest level since 2007. This offers positive momentum for the market heading into 2018.

"We do expect new home sales to pick up over the next year," said Aaron Terrazas, senior economist at Zillow. "Home builders do sense that there is demand out there, particularly at more affordable price points, and are doing what they can to try to meet that demand."

Sales in November jumped to a postrecession high, clocking in at a 689,000 unit rate.

Despite solid growth in sales in 2017, sales still remain well below the elevated levels seen before the 2007-09 financial crisis and recession.

New home sales dropped in all regions in December.

In the wider housing market, inventory has been tight recently -- in part because of lackluster home construction -- and that has contributed to a run-up in home prices.

The median sale price for a new home sold in December was $335,400. At the current sales pace, there was a 5.7-month supply of new homes on the market at the end of December. Though the December figure was up from 4.9 in November, supply remains tight.

Prospective Charlotte home buyer Krishan Intwala, 32 years old, recently shifted focus from looking at updated resale homes to looking at new homes, recognizing the higher price of new homes makes it tough.

"As much as we like [new homes], it's hard to swallow getting a smaller house, a smaller yard, a smaller lot of land," Mr. Intwala said.

New home sales data can be volatile from month to month. December's decrease comes with a margin of error of plus-or-minus 11 percentage points.

Sales of previously owned homes, which represent the bulk of the U.S. market, fell in December but rose in 2017 as a whole to their highest level since 2006, the National Association of Realtors said Wednesday.

Write to Sarah Chaney at sarah.chaney@wsj.com

(END) Dow Jones Newswires

January 25, 2018 13:44 ET (18:44 GMT)

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