November new house sales fall more than expected, construction inventories fall

Sales of newly built homes came in much weaker than expected for November and builders’ inventories are not doing well. The stocks of the biggest names, like Lennar, Pulte, DR Horton and Toll Brothers, fell more than 2% with the news.

New home sales fell 11% more than expected in November compared to October, according to the US Census.

The October reading was also revised downwards. Sales reached an annualized rate of 841,000, below the peak of 979,000 in July. These numbers are based on signed contracts, not closings. Sales grew 20.8% year on year.

The decline may be due to prices, which have been rising steadily. The average price of a newly built home rose 2.2% compared to November 2019, to $ 335,300.

“In a sign that affordability will continue to be the main challenge, sales of basic homes – priced under $ 200,000 – represented just 2% of total sales,” said George Ratiu, senior economist at “These figures reflected the slowdown in the economy, rising unemployment claims and the growing challenge of accessibility, which hampered activity, despite record low mortgage rates.”

Mortgage rates fell sharply in November, when those sales closed. This gave buyers more purchasing power, but it also likely helped to raise prices for the same reason.

“I have to ask myself if the aggressive gains in home prices are starting to impact that first-time buyer. After all, it was Toll Brothers that used the term ‘etiquette shock’ for some when they reported earnings a few weeks ago,” he said. Peter Boockvar, director of investments at Bleakley Advisory Group.