Expected end of tax credit wallops new home sales

New home sales fell a steep 11.3% to a seasonally-adjusted annual rate of 355,000 in November, which puts the supply of homes on the market at 7.9 months (up from 7.2 months).

Unlike existing home sales, which are recorded at closing, the sale of a new home is counted when a contract is signed. We did see a jump in new home sales in October as buyers rushed to beat the end of the first time home buyers tax credit, which had originally been set to expire November 30.

The extension and expansion of the tax credit, coupled with the growing economy and still-low mortgage rates, should lend support to the market next year.