Purchases of new U.S. homes unexpectedly dropped in December, indicating the U.S. housing rebound will take time to develop after the industry completed its first year of recovery.
Sales declined 7.3 percent to a 369,000 annual pace following a 398,000 rate in November that was higher than previously estimated and the strongest in more than two years, Commerce Department figures showed today in Washington. The median estimate of 77 economists surveyed by Bloomberg called for sales to reach 385,000 last month.
Even with December’s slip, 367,000 new homes were purchased for all of 2012, the most since 2009 and the first annual gain in seven years, showing the housing market is on the road to recovery. A dearth of previously-owned properties in the U.S., mortgage rates near record lows, healthier job prospects and a rising number of households should stoke demand for newly- constructed homes this year.
“2012 was the first year we’ve seen a sustained recovery in housing,” Celia Chen, a housing economist at Moody’s Analytics in West Chester, Pennsylvania, said before the report. “This year will be even better. On the supply side, inventories are pretty tight. On the demand side, things are definitely improving, and that’s because job growth is in place.”
Economists’ estimates ranged from a sales rate of 340,000 to 406,000. November was previously reported as showing sales of 377,000 at an annual rate.
For all of 2012, new home sales increased 19.9 percent, the biggest jump since 1983 and the first gain since 2005.
The median price of a new home increased 13.9 percent last month from a year ago, climbing to $248,900.
In December, purchases decreased in three of four regions, led by a 29.4 percent slump in the Northeast. Sales also fell 11.1 percent in the West and 8.4 percent in the South. They rose 21.3 percent in the Midwest.
The housing data for last year show the market gained vitality in 2012. Construction of new properties rose last month to a 954,000 annual rate, the fastest pace since June 2008, according to Jan. 17 Commerce Department figures. The December print capped the best year for homebuilding since 2008.
Today’s report showed the supply of new homes at the current sales rate climbed to 4.9 months from 4.5 months in November. There were 151,000 new houses on the market at the end of December, up from 149,000 the prior month.
There were 1.82 million previously-owned homes on the market in December, the fewest since January 2001, according to National Association of Realtors data earlier this week.
The building environment has brightened the mood among construction companies. The National Association of Home Builders/Wells Fargo builder sentiment index held at 47 in January, the highest since 2006. Nonetheless, readings below 50 mean more respondents said conditions were poor.
“We think that 2013 is going to be a good year for the U.S. construction industry,” Charles Bunch, chief executive officer of paint and glass maker PPG Industries Inc., said during a Jan. 14 earnings call. “You’re seeing a lot of anecdotal information about, in certain markets, the housing resale market strengthening. We’ve seen increases in new-home construction permits and starts, so, overall, I would say we’re fairly optimistic.”
Figures from the NAR earlier this week showed previously owned homes sold at a 4.94 million rate in December, the second- highest since 2009. Last year 4.65 million homes were sold, up 9.2 percent from 4.26 million in 2011 and the most since 2007. The annual advance was the biggest since 2004.
Sales of new homes, counted when contracts are signed, are considered a timelier barometer than purchases of previously owned dwellings, which are calculated when a deal closes. Newly constructed houses accounted for 7.3 percent of the residential market in 2012, down from a high of 15 percent during the boom of the past decade.