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Washington: Sales of new US single-family homes rose for a second month in a row in November as Americans took advantage of lower mortgage rates and stimulus from desperate builders, but the overall housing market remains depressed.
The Commerce Department said Friday that new home sales rose 5.8% last month to a seasonally adjusted annual rate of 640,000 units. The October sales pace was reduced to 605,000 units from the previously reported 632,000.
Sales rose in the Midwest and West, but fell in the Northeast and the densely populated South.
Economists polled by Reuters had forecast new home sales, a small fraction of U.S. home sales, to slip to 600,000 units in November. Sales fell 15.3% year over year.
National Association of Home Builders It reported this week that 62% of builders in December were using incentives to entice buyers, including providing mortgage rate buy-downs, payment points for buyers and offering reductions in prices.
The Federal Reserve’s sharpest interest-rate-hike cycle since the 1980s, aimed at taming inflation, has cooled housing demand.
Reports this week showed single-family building saw a record decline for the 12th straight month in December.
Single-family housing starts and building permits fell to a 2-1/2-year low in November, while sales of previously owned homes posted their 10th consecutive monthly decline, the most since 1999. There is a long stretch.
The average rate on a 30-year fixed-rate mortgage fell to 6.27% this week, the most since 2002, after rising from more than 7% a few months ago. However, the rate is more than double that of this year. Earlier data from mortgage finance agency Freddie Mac showed.
The median price of new homes in November was $471,200, up 9.5% from a year ago. There were 461,000 new homes on the market at the end of last month, down from 469,000 in October. Homes under construction account for 62.9% of the inventory, while homes currently under construction account for 23.2%.
Completed homes account for 13.9% of inventory, well below the long-term average of 27%. It will take 8.6 months to clear the supply of homes on the market at November’s sales pace, down from 9.3 months in October.
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