The media seem anxious to tout the strength of the housing market based on the 4.8 percent uptick in new home sales reported in the December data. This is a case where a bit of disaggregation is in order. Sales were up 27.3 percent in the Northeast and 26.6 percent in the Midwest. They rose just 0.3 percent in the South and fell 4.4 percent in the West.
Those of us who live in the northern part of the country might recall that we had one of the warmest Decembers on record last year. Typically, you can count on some stretches of cold and snowy weather during December, which might discourage people from shopping for a new home. Given the good weather this year, it would be surprising if there wasn't some increase in home sales in the Northeast and Midwest. The fact that there was no similar increase in the South and West might suggest that weather was more important than underlying conditions in the housing market. We'll know more next month.
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