Economist: New Construction Drove Housing Inventory up in December 2017

New home sales dropped 9.3 percent in the U.S. housing market from November to December 2017. The number of new homes on the market increased 3.9 percent over that same period.

In his analysis of Census Bureau data, Zillow senior economist Aaron Terrazas concluded that "the silver lining in the December report was clearly inventory," adding that the 3.9 percent increase of new homes on the market from November to December "was the largest monthly increase in the number of new homes on the market since April 2006 and means that there are now more new homes for-sale than at any point since April 2009. New home inventory is up 15.2 percent compared to December 2016."

However, the increase was driven almost entirely by homes for which construction had not yet started: For 10,000 of the 11,000 additional homes, or 91 percent, construction had not yet begun. The median seasonally adjusted price of new homes sold in December reached a new all-time high, climbing 0.7 percent from November to $331,400. It’s up 2.5 percent over the past year.

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