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New Home Sales End 2018 With a Thud

Jan 28, 2019 11:29:50 AM

New Home Sales End 2018 With a Thud

The Northeast saw the largest year-over-year drop, Redfin reports.

Due to the partial government shutdown, reports from the Department of Housing and Urban Development on new home sales are not available. However real estate brokerage Redfin released its November and December 2018 numbers on single-family new home sales, garnered from multiple listing services (MLSs) and county records across the markets that Redfin serves.

Sales of new homes in all four major U.S. regions dropped in the last two months of 2018, according to a report released by brokerage Redfin. The year-over-year trend was especially drastic in the Northeast, where new home sales fell by 16.1 percent in December.

Below is a look at the annual drop in single-family new home sales (seasonally adjusted) across the country in the final two months of last year:

Region Nov. 2018 Dec. 2018
Midwest -2% -13.4%
Northeast -12.3% -16.1%
South -2.9% -10.3%
West -8.6% -13.4%
National -4.6% -11.6%

Of all four regions, sales of new homes has been in negative territory the longest in the Northeast. That region hasn't experienced growth since January 2017, according to Redfin data.

"All around the country homebuyers were backing off at the end of last year due to high prices and high mortgage interest rates, and 2018 tax reform made it even more expensive to buy high-priced homes in high-tax states like Massachusetts, Connecticut and New York," said Redfin chief economist Daryl Fairweather. "New homes tend to be pricier than existing homes, which is one reason sales of new homes dropped off so much in the Northeast."

Sales of new homes could pick up in the coming months. Builder confidence is up two points to 58 this month, driven in part to the recent decline in mortgage rates and continued job growth. Another factor that could contribute to an increase in new-home sales is a decline in the cost of building materials, which came down 1.8 percent in December.

Redfin is also making its new construction data available for download. Below are data highlights for the fourth quarter of 2018:

  • The median sale price for new homes in the fourth quarter of 2018 was $371,200, essentially unchanged from the same period in 2017. Compare that with existing homes, which had a median sale price of $287,000, up 3.1 percent from the year before.
  • Supply of new homes was up 7.4 percent annually in the fourth quarter, while supply of existing homes was up 5 percent.
  • The typical new home was on the market for 91 days, five days less than the year before. Existing homes spent a median of 43 days on market, two days less than the year before.

The Redfin Data Center offers downloadable sets of monthly data on new construction prices, sales, inventory and other new residential market statistics at https://www.redfin.com/blog/data-center.

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