U.S. new home sales dropped 0.4 percent in December, as compared with the expected rise of 1.5 percent. Furthermore, the change occurred from a downward revised level in the prior month. In spite of the downside surprise, the number of homes sold was still in the upper portion of the recent range.
The consensus expectations would have pushed sales to the strongest reading of the current expansion. While the market did not see a new cyclical high, activity was still strong by standards of the past two years, noted Daiwa Capital Markets in a research report.
Region wise, results varied sharply. Sales in the West rose sharply by 31 percent, jumping far above all other readings in the current expansion. Results in the Midwest also were favourable, although sales were still well below the cyclical high and several months in the current growth was stronger.
On the contrary, sales dropped 15.4 percent in the South, moving to the lowest level of 2019 and to the middle portion of the range from 2018. Sales in the Northeast dropped 11.8 percent. The new level in the Northeast was in the middle of the range seen in the past year-and-one-half, but well shy of the strong market in the region in 2017 and early 2018.
The number of homes on the market rose 1.6 percent. The rise in inventory, along with the dip in sales, led to a rise in the months’ supply to 5.7 months, up from 5.5 in November.
