Summary for Week ending Dec 28th

It was a light holiday week for economic data. Happy Holidays to all!

New home sales increased to 377,000 in November and are on pace to increase 18%+ in 2012. This was a solid annual increase, and yet sales are still very weak - 2012 will be the 3rd lowest year for New Home sales since the Census Bureau started tracking new home sales in 1963.  So there is still plenty of upside for new home sales over the next few years.

Case-Shiller house prices were up 4.3% year-over-year in October, and will probably be up around 6% for the year. And the 4-week average of initial weekly unemployment claims declined to the lowest level of the year - and the lowest since early 2008.

Consumer confidence was weak (future expectations), and there were some reports of retail sales being below expectations, but overall the data was decent.

Of course the economic headlines were about the "fiscal cliff" negotiations. There is no cliff (more of a slope), and there is no drop dead date - but policymakers do need to reach an agreement soon.

Here is a summary of last week in graphs:

' New Home Sales at 377,000 SAAR in November

Click on graph for larger image in graph gallery.

The Census Bureau reports New Home Sales in November were at a seasonally adjusted annual rate (SAAR) of 377 thousand. This was up from a revised 361 thousand SAAR in October (revised down from 368 thousand). Sales for August and September were revised up slightly.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed.

This graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale was just above the record low in November. The combined total of completed and under construction is also just above the record low since "under construction" is starting to increase.

New home sales have averaged 363 thousand SAAR through November 2012, up sharply from the 307 thousand sales in 2011. Also sales are finally at the lows for previous recessions too.

This was slightly above expectations of 375,000.