Sales of new single-family homes are up 8.0 percent to 664,000 in December at an annual rate after an upward revision to 615,000 in November. Sales are up 4.4 percent compared to a year ago. The December level is not materially different than the consensus of 650,000 in the Econoday survey of forecasters. Despite mortgage rates being at over 20-year highs, sales of new single-family homes got a boost from the lack of inventory in the existing home market. Some of the sales may be related to incentives offered by builders of new homes who are trying to avoid any accumulation of inventory.

The supply of new homes available for sale is down to 8.2 months' worth in December after briefly ticking up to 8.8 months in November, and is a little below the 8.5 months' supply in December 2022. Despite an overall slow housing market, new homes are selling. The median price of a new single-family home is down 3.0 percent to $413,200 in December from November, and 13.8 percent lower than December 2022. Some of this reflects price breaks offered by homebuilders to move inventory, but some is also that homebuilders have shifted construction to smaller, entry-level units that are generally lower in price.

In December, 44 percent of new single-family homes sold are under construction, suggesting that homebuyers are purchasing in anticipation of moving in order. Homes already completed account for 42 percent of all sales and homes not yet started are 14 percent of the total.

The Freddie Mac average rate for a 30-year fixed rate mortgage had a near-term peak of 7.65 percent in October, fell to 7.44 percent in November, and then to 6.82 percent in December. For January to-date, the rate is down a bit further to an average of 6.63 percent. Homebuilders will be anticipating an influx of buyers in the spring months while supplies of existing homes remain limited, especially for first-time buyers who are generally at lower price points.

New home sales have been swinging sharply from month to month. After November's lower-than-expected 590,000 annual rate, December's consensus is a sharp rebound to 650,000.

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.