US: New Home Sales drop in December, but a solid 2020 is expected – Wells Fargo

Data released today showed that New Home Sales dropped in December 0.4%. Analysts at Wells Fargo point out the drop left sales well below expectations, which had risen following earlier upbeat reports on resales and regional sales.

Key Quotes: 

“New home sales fell 0.4% in December to a 694,000-unit annual rate and sales for the prior month were revised from a 719,000-unit pace to a 697,000-unit pace. The slower sales pace is surprising only because so much of the recent housing data have been so strong.”

“December brought total 2019 sales to 681,000, exactly in-line with our forecast and a 10.3% increase compared to the 617,000 new homes sold in 2018. Revisions to the preliminary data will likely shift this total, but 2019 was certainly a strong year.”

“With mortgage rates low and builder optimism rising, we expect sales to be solid again in 2020. Inventories are low, however, which will exert upward pressure on prices.”