New home sales spiked 11.6 percent in December to a 481,000-unit pace, marking the highest level of sales since June 2008. With the exception of the Midwest, sales rose in every region. Inventories also firmed.
New Homes Sales Came in Better than Expected
- New home sales posted a stronger-than-expected reading in December, jumping 11.6 percent. Although the previous month was downwardly revised, net revisions to the prior three months were positive. The increase in new home sales is consistent with builder sentiment, which registered its third straight monthly reading at a high level. Looking ahead, we expect new home sales to rise 16.7 percent in 2015.
Rising Inventories Will Be a Positive for Sales
- One of the major impediments to a more robust housing market recovery has been the low level of inventories. However, inventories ended 2014 up more than 17 percent over the past year at 219,000 homes. The level marks the highest reading since March 2010. All of the gain in inventories has been in the “completed” and “not started” categories. The number of completed homes for sale is up 38.6 percent from a year ago.
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