Forecast for Existing and New Home Sales (December 2018)

• Zillow expects estimates existing home sales fell 2.6 percent in December from November to 5.18 million units at a seasonally adjusted annual rate (SAAR). That would be down 6.8 percent from December 2017.
• We estimate new home sales totaled 579,000 units (SAAR) in December, down 2.2 percent from a year earlier. November new home sales data have not been reported yet by the federal government due to the partial shutdown.

Existing home sales staged an unexpected rebound in November, despite mortgage rates that hovered near seven-year highs. It was the second consecutive month of increasing sales – the largest two-month upswing since spring 2018, when sales began to fall from the plateau where they had stood for much of late 2017 and early 2018, and a testament to rebounding for-sale inventory. Even with the recent increase, existing home sales remained below where they were during the summer.

But sales likely fell back in December – the casualty of November's high interest rates (higher rates tend to hit sales with a lag since it often takes 30 days from the time an offer is made to the time a sale closes), financial market turmoil in December, and some delayed closings as a result of the partial federal government shutdown. We expect existing home sales fell 2.6 percent from November to 5.18 million units at a seasonally adjusted annual rate (SAAR). That's down 6.8 percent from December 2017, which saw a surge of sales in anticipation of changes to the federal tax code limiting some historic tax benefits to homeownership.

The National Association of Realtors (NAR) will report December existing home sales on Tuesday, January 22.

 

The outlook for new home sales is somewhat cloudier, because November new home sales data were not released on December 27 as planned due to the partial federal government shutdown. The official Census Bureau numbers for November 2018 new home sales will be released only after the federal government reopens.

The gap in data availability come at a moment when there is growing uncertainty about the underlying momentum of the American housing market, particularly when it comes to new home building. For example, a rising share of new home listings are seeing price cuts, particularly in pricey coastal markets. We estimate new home sales totaled 579,000 units (SAAR) in December, down 8.9 percent from a year earlier.

The U.S. Census Bureau is scheduled to report December 2018 new home sales on Friday, January 25, if the federal government has reopened by that time.

 

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