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New home sales drop 7.3% in December, not the end of the world

New home sales fell a bit in December, but when it comes to a housing recovery, we explain why it’s not a major setback, despite falling short of economists’ projections.

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New home sales slow in December

According to the U.S. Census Bureau, sales of new single family homes fell in December by 7.3 percent to a seasonally adjusted rate of 369,000 from a revised November figure of 398,000. December sales, while 8.8 percent higher than December 2011, failed to meet economists’ expectations, falling short of the projected 388,000 units sold in the month.

Overall, housing is said to be more than half way back to its pre-recession normal, but the new home construction sector was one of the hardest hit, so while builder confidence and permits are on the rise, sales sputtered in December. At their peak in 2005, new home sales hovered just shy of 1.4 million units on a seasonally adjusted annual rate.

New home sales at higher prices

Additionally, the Census Bureau reported that the median sales price for new homes sold in December was $248,900, roughly 1.0 percent above the November median of $246,200. The average sales price was $304,000, rising 1.4 percent from November when the average was $299,700.

December closed out with a 4.9 month supply at the current sales pace, up roughly 1.0 percent compared to November.

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The Census Bureau estimates new home sales totaled 367,000 for the full year, up 19.9% over sales of 306,000 in 2011.

Explaining the housing “recovery”

While this indicator isn’t showing positive results for the moment, it is only one of many that make up the entire picture, and while housing as a whole is seeing signs of improvement, it is still far too early to call housing “recovered.” Think of housing as a patient who has long been on life support, unable to breathe on their own, and about 90 days ago, they were taken off of the breathing machine and are now working to recover. They can’t quite take a full breath, but they’re not on life support, so any signs of improvement are welcomed by all and feel like major milestones despite being so far away from a full recovery.

Economists do not agree on when housing will be fully recovered, as some say this year, others forecast 2016, some say 2020 and beyond until we see pre-recession numbers again. Regardless, a weathered industry is happy for any signs of improvement as the long road to recovery is finally under way after the sector found its bottom last year, and sputtering sales around the holiday season are no threat to housing, as they’ll improve in coming months, given that starts and permits are up.

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

2 Comments

2 Comments

  1. sound alone

    January 25, 2013 at 5:26 pm

    Well one bad month but overall good news. Need to keep the good housing numbers going but in order to do that loans have to come. And after the past several years of bad loans that has led to bad credit.One of the most important things is getting the credit report accurate. Getting that cleaned up will ensure that you can purchase things in the future and get that job. Use some of the most reputable credit repair companies. A lot of scammers out there, so look into the ones that have the best reputations like Lexington Law or similiar reputable companies.

  2. Kate coolide

    January 28, 2013 at 4:41 pm

    Sound advice. Hard to do it on your own and best to use a reputable company like Lexington Law. I’ve heard some bad things in this arena but good things about them.

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