- New homes sales in January were up 3.7%, but let’s not get ahead of ourselves. Monthly new homes sales numbers are highly volatile, and this month’s figures aren’t statistically significant.
- However, looking past the monthly volatility, the 12-month rolling total of new homes sales are up 12.1% year-over-year and has boosted sales to 85.4% of the 50-year norm.
- New homes are helping satisfy homebuyers constrained by low resale inventory, and the slow and steady uptick in sales reflects this. That said, new sales have much room to grow. In January, new home sales represented about 11.6% of all sales, which is less than half of the pre-recession average of 23.6%.
New home sales in January kicked off the year at a seasonally adjusted rate of 555,000, which is up 5.5% year-over-year and 3.7% month-over-month. However, January’s monthly numbers aren’t statistically significant, so we should take them with a grain of salt. A less volatile number to look at is the 12-month rolling total, which is up 12.1% year-over-year. This represents a resurgence of sales to a nine-year high. The increase over last year puts the 12-month total at 85.4% of the 50-year average, up from 0.4 percentage points from December.
However, the 12-month rolling total of new home sales compared to the 50-year average looks like there’s a lot more room to grow when taking into account the size of the U.S. population. New home sales per 1,000 U.S. households was 4.7 in January, which is only 65.4% back to normal but up from 65% in December.
How many new home sales do we need for the market to look normal? If we compare the share of new home sales to total sales, that share needs to more than double. In January, new home sales made up about 11.6% of all home sales, which is less than half of the historical average of 23.6%. While it’s been tough for homebuyers to buoy existing home sales because of low inventory, it looks like there is much potential for new homes sales to run higher.
