Sales of new single-family homes are down 12.2 percent in November to 590,000 units at a seasonally adjusted annual rate after a small downward revision to 672,000 in October. The November level is substantially below the consensus of 690,000 in the Econoday survey of forecasters. November sales are up 1.4 percent compared to a year ago. The month-to-month decline is a regional story where a drop in homebuying in the region that accounts for over half of all sales skewed the data. In the South, sales are down 20.9 percent to 337,000 and in the West sales are off 5.1 percent to 150,000. Sales rose 25.0 percent to 70,000 in the Midwest and 3.1 percent to 33,000 in the Northeast. Sales declines are likely due to the near-term peak in mortgage rates in late October and early November which impaired home affordability. However, rates are on the decline and supplies of existing homes remain exceptionally lean. Sales of new homes will probably rise again in the coming months.

The supply of new homes available for sale rose to 9.2 months' worth in November from 7.9 months in October and is the highest since 9.4 months' supply in November 2022. The median price for a new single-family home is up 4.8 percent to $434,700 in November, and down 6.0 percent compared to $462,300 in November 2022. Homebuilders have been shifting into the market gap left by lack of inventory in existing units, which means more smaller entry-level homes. However, home prices in this segment of the market remain firm in competitive conditions.

Restrained buyer traffic due to higher mortgage rates has led to fewer purchases of homes not yet started. Previously buyers who had a lock on a lower rate were willing to commit to buying a home before it was built. In November, 13 percent of sales were for homes not yet started compared to 19 percent in October. Those buying a home under construction rose to 45 percent in November from 40 percent in October. Sales of completed homes in November are at 42 percent of the total compared to 41 percent in October.

From a lower-than-expected 679,000 in October that, however, followed September's higher-than-expected 759,000, forecasters see annual sales rising to 690,000 in November.

New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Each time the construction of a new home begins, it translates to more construction jobs, and income which will be pumped back into the economy. Once the home is sold, it generates revenues for the home builder and the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items new home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, new home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the new home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.