Sales of new homes rose in November to an annualized rate of 719,000, according to the Census Bureau and the Department for Housing and Urban Development.
That total, which was 1.3% above October’s pace, was 16.9% higher than November of last year, when new homes were at 615,000.
“In a year that’s been choppy at times, new home sales more than pulled their weight in the back half of 2019,” Zillow Economist Matthew Speakman said. “Even though some of the starch from prior months’ strong initial data has been washed out through downward revisions, 2019 will go down as the best year for new home sales since before the Great Recession.”
The median sales price of new homes was $330,800, while the average price was $388,200.
Residential building permits hit a 12-year high last month, surging 11.1% over the year. Housing starts were up 13.6% and housing completions were up 7.3%. It’s the sixth consecutive months since housing starts have grown.
In light of the new numbers, Fannie Mae revised its housing forecast for 2020. The company predicts housing starts to leap by 10% across 2020, with 1 million new homes hitting the market by 2021.
As Doug Duncan, chief economist and senior vice president at Fannie Mae explains, “We now expect single-family housing starts and sales of new homes to increase substantially, aided by a large uptick in new construction as builders work to replenish inventories drawn down by the recent surge in new home sales activity.”
In total, Fannie Mae predicts new home sales to grow 5% in 2020, with much of the growth on the tail-end of the year, and 5.5% in 2021. Existing home sales will also increase, its experts say, but at a slower pace (1.5% in 2020 and 0.2% in 2021).
Robert Dietz, National Association of Home Builders (NAHB’s) chief economist, says a number of factors are contributing to this industrywide bump in confidence.
“Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates and a strong labor market,” Dietz said.
It is expected that even though the construction is booming, prices will not drop significantly, especially for lower-priced homes. They’re reporting that these new houses won’t alleviate the supply-and-demand problems.
“Despite the expected increase in the pace of construction, the supply of homes for sale remains tight and strong demand for housing is continuing to drive home prices higher, particularly in the more entry-level price tiers,” Duncan said.