New Home Sales Unexpectedly Strong In December

Date: January 29, 2016

New Homes Sales Up 10.8% Annually To 544,000

The Commerce Department reported Wednesday that sales of new homes rose 10.8 percent in December to an annual rate of 544,000. Economists had expected sales to come in at an annual rate of 500,000 for the month, Bloomberg News reported. For the full year of 2015, sales were up 14.5 percent to 501,000, while the median price fell 4.3 percent from the same period one year ago to $288,900. Bloomberg adds employment gains “and attractive mortgage rates combined to push new-home sales forward for a fourth straight year.” The AP said new home sales were at their “strongest pace in 10 months, with 2015 marking the strongest year for this segment of the housing market since 2007.” December’s figure was “the third consecutive monthly gain since sales collapsed in September,” and “nearly pulled the sales rate even with the level of 545,000 in February 2015 and points to continued momentum for real estate and construction in the opening months of this year.” Reuters stated that the December report shows the housing sector remains strong even as equities markets are down and economic growth appears to be slowing.

What This Means For Small Businesses

The housing market has recovered in fits and starts in the years since the last recession. Heading into Q1 2016, small businesses in construction and housing, in particular, may continue to see uneven growth, though the latest new home sales data is somewhat positive. As NFIB Chief Economist William Dunkelberg pointed out in the latest Small Business Economic Trends report, “With weak expectations for sales and business conditions, owners see no need to add to current stocks.” This could translate into slower growth for a number of sectors, including construction.

Additional Reading

The Wall Street Journal also reported the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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