Sales of new single-family homes rose slightly in December after falling for four consecutive months from a 14-year high in July (see top of first chart). Total sales rose 1.6 percent in December to an 842,000 seasonally adjusted annual rate. Sales are still up a robust 15.2 percent from a year ago. In July 2020, sales came in at a 979,000 pace, the highest since December 2006. A rise in single-family building permits in December, to the highest level since August 2006, suggests a continued positive outlook (see top of first chart).
Sales fell in two of the four regions tallied: sales fell 5.1 percent in the South – the largest region by sales volume – leaving sales 21.7 percent above year-ago levels while sales declined 6.1 percent in the Northeast, leaving that region’s sales rate 20.5 percent below the year-ago pace. However, sales were up 8.8 percent in the West and were 10.4 percent above the year-ago level while sales were up 30.6 percent in the Midwest and 13.3 percent above year-ago levels (see second chart).
Total inventory of new single-family homes for sale rose to 302,000 in December, leaving the months’ supply (inventory times 12 divided by the annual selling rate) at 4.3, up 2.4 percent from November but 18.9 percent below the year-ago level (see bottom of first chart). While the months’ supply was up slightly in December, the median time on the market for a new home declined to 3.1 months from 4.0 in November (see bottom first chart).
Though unemployment remains high and the outlook for the labor market and the broader economy remain highly uncertain, near record-low mortgage rates and surging demand for less dense living areas are supporting a strong recovery for the housing market. Only time will tell if these conditions continue, but for now the housing market remains one of the brightest areas of the economy.