U.S. new home sales likely to have moderated in December

U.S. new home sales data for the month of December is set to be released tomorrow. New home sales had risen sharply by 17.5 percent to 733k unit rate. Like existing home sales, stronger economic growth and unseasonably mild weather has stimulated new home sales to cycle highs. Development activity has also increased, giving builders a little more inventory to sell.

The recent strength in sales is not surprising given that homebuilder confidence has risen sharply, as buyer traffic and sales have also increased. The South and West accounted for most of November’s increase, a trend that is believed to have continued in the December data, stated Wells Fargo in a research report.

“A lack of inventory will continue to be a limitation on home sales. We look for new home sales to increase at a 699K unit pace, a modest reprieve from November’s breakneck pace”, added Wells Fargo.

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