U.S. new home sales unexpectedly fell in November, driven by a sharp decline in the South and suggesting a bumpy road to housing market recovery.
Purchases of new single-family homes decreased 12.2% at an annual rate of 590,000 last month, a one-year low, government figures showed on Friday. The median forecast in a Bloomberg survey of economists called for a rate of 690,000.
The sales decline may represent a temporary setback for an otherwise improving housing market. Reports from earlier in the week showed a six-month high in home construction and a rebound in builder confidence.
“Especially when compared to the high number of new home starts released earlier this week, the low new home sales in November are not particularly significant,” Robert Frick, senior vice president, said in a note. corporate economist at Navy Federal Credit Union. “The new housing market is shaping up to have a good 2024, with inventories already high and more in the pipeline. “When rates go down next year, there will be an increase in sales.”
The outlook for the new home market has improved as 30-year mortgage rates are back below 7% amid expectations that the Federal Reserve is prepared to reduce borrowing costs next year. Additionally, builders are taking advantage of low inventory on the resale market and enticing buyers with incentives like subsidized mortgage rates and price cuts.
Friday’s government report showed the median sales price of a new home fell 6% from a year earlier to $434,700. He new home inventory increased in November for the fourth consecutive month, reaching the highest level in almost a year.
Sales decreased almost 21% in the souththe largest U.S. region, to the lowest level since April 2020. Purchases also fell in the West.
Sales of new homes are considered a more timely indicator than purchases of used homes, which are calculated when contracts are closed. Sales of used homes increased 0.8% in November compared to the previous monthwhen they fell to the lowest level since 2010.
However, new housing data is volatile. The report showed 90% confidence that the change in sales ranged between a drop of 27.8% and an increase of 3.4%.
