A day after the latest read on existing-home sales suggested record-high prices may constrain (or at least cool) demand going forward, America’s red-hot housing market produced another miss.
New home sales dropped 11% to an 841,000 annual rate in November, well short of the 995,000 consensus expected.
The range of forecasts from more than five-dozen economists was 949,000 to 1.1 million, so the actual print was well below the lowest guess. It was the fourth consecutive monthly decline.
The pace is, of course, still well ahead of that seen in November of 2019. Specifically, 19.5% higher than a year ago, underscoring the extent to which pandemic trends and record-low mortgage rates have fueled what some worry is a new housing bubble in America.
The median sales price of new houses sold last month was $335,300, while the average price was $390,100.
Although the market remains extremely tight, the series is developing a “U-shape,” if you will. Months’ supply was 4.1 for November, versus 3.6 in October. We are now off the all-time lows.
This is just incremental data, but coming back to remarks made here at the outset (i.e., when considered in conjunction with Tuesday’s read on existing-home sales), we may be seeing signs that the market is transitioning to “rolling boil” from “screeching tea kettle.”
“An astute client recently questioned whether or not the Fed is at risk of creating another housing bubble comparable to that which triggered the 2009-2010 crisis,” BMO’s US rates team remarked on Tuesday.
“The short answer is ‘not yet’ — although the longer monetary policy is extraordinarily accommodative, the more topical financial stability will become,” they added.