New US Home Sales Unexpectedly Dive As Housing Roller Coaster Continues

New US home sales tumbled in November, according to volatile data released ahead of the holiday weekend.

The 12.2% drop was the largest since April of 2022, and the 590,000 annual rate the slowest in a year.

The headline missed every estimate. The lowest guess from 61 extensively-trained professionals was 650,000.

To reiterate: This series is quite volatile, and it’s never a great idea to extrapolate from it. Builder sentiment fell a fourth straight month in November before recovering in December.

New construction benefited from an acute dearth of resale inventory in 2023, but the sharp rise in financing costs from August through late-October was a bridge too far for many buyers, even with builder incentives and price cuts. Sales dropped almost 21% in the South last month, hitting the lowest levels since April of 2020.

Recall that new home prices fell the most on record in October as initially reported. That decline (nearly 18%) was revised to show a shallower, but still pronounced, 16.5% decline. Although median prices were the highest since August last month according to Friday’s data, they nevertheless notched a third straight YoY decline, falling 6%.

The median price in November was $434,700. The record was $496,800 in October of 2022. Note that YoY price growth has been negative for seven of the last eight months. The bad news for would-buyers is that median prices are still 32% higher than they were at the end of 2019.

Months’ supply in November rose to 9.2, a sharp increase from 7.9 in October. In fact, the 1.3 month-to-month increase was among the largest on record.

One more time: It’d be a mistake to extrapolate from one month of new home sales data. Mortgage rates are down dramatically from the highs in October and, as noted above, builder sentiment perked up in December.

Data out earlier this week showed housing starts jumped the most since May in November, and existing home sales rose for just the third time in 22 months.