Wells Fargo Reports: New Home Sales Surge in November

New home sales surged 17.5 percent to a 733,000-unit pace. Sales for prior three months were revised lower, however. Even with the revisions, the three-month trend still shows new home sales clearly strengthening.

New Home Sales Are Ramping Up

• Drawing firm conclusions from the housing data this time of the year are often perilous, as the seasonal adjustment process normally makes huge corrections to the underlying data, which typically slow this time of year. This year, however, sales have risen, reflecting both stronger economic growth and unseasonably mild winter weather. Development activity has also ramped up, giving builders a little more inventory to sell.

Homebuilders Have A Good Reason to be Optimistic

• The strength in sales is not surprising. Homebuilder confidence has surged, as buyer traffic and sales ramped up.
• The South and West accounted for the bulk of November’s increase, with sales in the West surging 31.3 percent.
• The greatest limitation to home sales continues to be a lack of inventory. With few completed homes available, sales of homes not yet started accounted for most of November’s increase.