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New Home Sales Close 2014 on a High Note

New Home Sales Close 2014 on a High Note

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

In our effort to cover important trends that affect the mortgage market, FREEandCLEAR keeps a close eye on new home sales, which is the number of newly constructed housing units that are sold in a month.  The new home sales figure is reported separately from the existing home sales figure, which is the number of previously constructed homes that are sold in a month.  The new home sales market is smaller than the existing home sales market but it is still an important indicator for the real estate and mortgage markets.  In addition to reporting the number of housing units sold, the new home sales report also includes information on the supply of units for sale as wells as the median and average new home sales price.

The new home sales report, issued on a monthly basis, includes statistics for the prior month.  The report for January 2015 showed that new home sales in December increased 11.6% to an annualized 481,000 units as compared to the revised 431,000 units figure for for November.  The December figure came in significantly above estimates as analysts had projected approximately 452,000 annualized units.  The December median home sales price increased 2.2% on a monthly basis and 8.2% on an annual basis to $298,000.  The number of new homes available for sale, known as supply, increased 2.3% to 219,000 although supply as compared to monthly sales declined from 6.0 months in November to 5.5 months in December due to the increase in monthly sales.  The uptick in new home sales was driven by strength in the South and Northeast while the Midwest and West showed declines.  The strong New Home Sales report follows the positive Existing Home Sales report for December which came in at the high end of expectations. (Source: Bloomberg)

What it Means for Mortgage Borrowers

Strong new and existing home sales reports for December suggest that low interest rates and stabilizing prices pulled home buyers into the market to finish 2014.  We will keep an eye on the decline in new home supply and the increase in median new home sales price in future reports as these factors could weigh down the housing market.  In the near term, low interest rates should continue to make buying a home more affordable and could potentially pull first-time home buyers into the real estate market.  Additionally, builders could respond to the decrease in supply and uptick in buying activity by increasing the construction of new homes.  After a bumpy year, the real estate market finished 2014 on a positive note, setting the stage for a strong start to 2015. Use the Mortgage Qualification Calculator on FREEandCLEAR to determine what size mortgage you can afford and keep track of low interest rates by using our INTEREST RATES feature.

The FREEandCLEAR Mortgage Expert

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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