Realty Check

Slight dip in November new home sales after Southern surge

Nov. new home sales down 2.1 percent
Nov. new home sales down 2.1 percent

Signed purchase contracts for newly built homes were down slightly in November, according to government data, but only after an unexpected upward revision to October's reading and a strange sales surge in the South.

October's national numbers were already up 25 percent from September, so some had expected the revision to go the other way. These readings, based on contracts rather than closings, are highly volatile and have a 20 percent margin of error. Sales are now at an annualized rate of 464,000, the highest in five years.

(Read more: Mortgage rates get a break on fees)

"Perspective is needed as it still is just barely above the 1991 recession trough of 401,000 and 338,000 in 1981," analyst Peter Boockvar of the Lindsey Group wrote in a note. "The average since 1980 is 697,000. The flip side of this of course is the enormous catch-up we have ahead of us."

New homes for sale at a development in Dublin, Calif.
Getty Images

Both construction and sales of new homes hit historic lows, and pent-up demand is high. The trouble is that financing is very tight, and first-time homebuyers have not returned to the market in large numbers.

Mortgage applications, in fact, fell again last week, even though rates moved only slightly higher. Purchase applications were down 4 percent on a seasonally adjusted basis and 11.5 percent year over year.

While more than one-third of existing homes sold are in all-cash deals, the new home market has far less cash because there are far fewer investors. But that may be changing.

(Read more: Sales of bank-owned homes surge)

Squaring "the near highest level of new home sales in years with a multiyear low in mortgage applications to buy a home continues to tell me that investors are beginning to get their feet wet in the new home space with the goal of renting these homes out," Boockvar said. "The secular shift to renting should continue."

(Read more: The healthiest housing markets? It'll surprise you)

But there is another strange dynamic in the sales numbers, specifically when looking at the raw number of homes sold in October.

"The surge to 38,000 sales was on a 6,000 surge in the South," noted housing analyst Mark Hanson. "The South is surging; the rest of the nation is not. If you back out the South October surge, the numbers are in line with the tepid demand since July, when [mortgage] rates surged."

However you parse the ever-volatile numbers, the question is whether pent-up demand will trump higher mortgage rates and tighter lending in 2014. Investors could also be the wild card, as supplies of distressed homes dwindle and new homes present yet another bet on the rental trade.

By CNBC's Diana Olick. Follow her on Twitter .