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New Home Sales Lag

New Home Sales Lag

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 November 2014 showed that new home sales in October increased slightly to an annualized 458,000 units as compared to the revised 455,000 units figure for for September.  The October figure came in below estimates as analysts had projected approximately 465,000 annualized units.  The most notable figure in the November new home sales report was the October median home sales price, which increased 16.5% to a record $305,000 as compared to a median home price of $259,000 in September, which reflected a 9.7% month-over-month decrease as compared to August.  The number of new homes available for sale, known as supply, increased slightly from 210,000 units in September to 212,000 units in October.  Although the units sold figure failed to meet expectations, the significant increase in median sales price significantly exceeded expectations. (Source: Bloomberg)

What it Means for Mortgage Borrowers

Sluggish new home sales combined with improving but relatively flat existing home sales suggests that the real estate market while stable, is struggling to gain significant momentum.  The increase in the median new home sales price in October could be a cause for concern as rising prices may prevent potential home buyers from entering the market although the new home sales report is typically very volatile so it is important to not draw major conclusions from any single month.  Additionally, the most recent reports on existing home sales and housing price indices suggest that home prices remain relatively flat.  Low interest rates also remain a positive factor for the real estate and mortgage markets.  Use the INTEREST RATES feature on FREEandCLEAR to monitor rates for lenders in your area and check out our Mortgage Process Guide as your first step to buying a new home.

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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