US New Home Sales Explode Higher In December, Ahead Of Mortgage-Rate Rip

Following an unexpected plunge in existing homes (unexpected for analysts, not so much for rational-thinking average-joes), expectations were for a big slowdown in new home sales from +12.4% MoM in November to +2.2% MoM in December. Consensus was wrong, very wrong… December New Home Sales screamed 11.9% higher MoM (the biggest MoM rise since July 2020 since November was revised lower to +11.7% MoM)…

Source: Bloomberg

For the full year, sales decreased to 762,000 from 822,000 in 2020 (-14% YoY), but the total SAAR of new home sales ripped to its highest since March 2021…

Source: Bloomberg

An increase in the number of completed homes over the last two months and prospects of higher interest rates this year as the Federal Reserve tightens monetary policy may have encouraged a pickup in contract signings.

The median sales price of a new home climbed 3.4% from a year earlier to $377,700.

Finally, perhaps the last two months of insane surges in new home sales will start to slow as mortgage applications continue to slide as mortgage rate soar (rates are 50bps or more higher now than when the sales data hit above). Last week saw mortgage apps plunge 7.1% to the lowest since Jan 2020…

Source: Bloomberg

And Powell ending MBS buying and hiking rates won’t help that situation.