New-Home Sales Dive in December

While official data on new-home sales has yet to be released due to the partial government shutdown, new data from research and analytics firm John Burns Real Estate Consulting reveals a double-digit drop.

In December 2018, sales of new homes fell 18 percent annually, following a 19 percent year-over-year decline in November 2018. JBREC's data correlates closely with federal data, counting 373 market ratings by local builders in more than 3,500 new-home communities, or 16 percent of the nation's new-home sales, and matches recent quarterly earnings reports by the largest U.S. builders. JBREC CEO John Burns tells CNBC, "I think the 4.5 percent plus mortgage rate is just a double whammy," adding, "it's keeping entry level buyers out of the market. They're very disappointed with what they can afford, and it's keeping current homeowners who want to move locked in, because their current mortgage rate is so much lower."

Just under one quarter of builders surveyed by JBRC said they reduced prices, and that may have helped sales in frothy markets such as Seattle and Portland, OR. Cancellations, however, rose compared to a year ago, with entry-level buyers pulling the plug most. Their cancellation rate was 18 percent, compared with move-up buyers who cancelled 14 percent of deals and luxury buyers who pulled out of 11 percent of deals. The rate for luxury buyers was higher than a year ago, which may be due to heavy turbulence in the stock market at the end of the year.

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