New Home Sales of new single-family homes in the U.S. fell to a one-year low in November, but the unexpected decline is likely to be temporary due to a chronic shortage of previously owned homes that is supporting demand for new construction.
New home sales fell 12.2% last month to a seasonally adjusted annual rate of 590,000 units, the lowest level since November 2022, the Commerce Department’s Census Bureau said on Friday. The October sales pace was revised lower to 672,000 units from the previously reported 679,000 units.
Economists polled by iFreshBriefs had forecast new home sales, which account for 13.4% of U.S. new home sales, rebounding to a pace of 685,000 units. New home sales are counted at contract signing, making them a leading indicator of the housing market. However, they can be volatile from month to month. Sales increased by 1.4% year-on-year in November.
Monthly sales increased in the Northeast and Midwest. They collapsed in the densely populated south and west.
The supply of previously owned homes on the market remains well below the nearly 2 million units before the COVID-19 pandemic, according to the National Association of Realtors, which this week reported a modest increase in home sales in November.
The rate on the popular 30-year fixed mortgage averaged 6.67% this week, the lowest level since June and down from 6.95% the previous week, according to data from mortgage lender Freddie Mac. It fell from a 23-year high of 7.79% at the end of October, following a decline in US Treasury yields. That should help stimulate home sales next year.
The median new home price in November was $434,700, down 6.0% from a year earlier, as builders cut prices to lure buyers. But house prices are unlikely to fall by as much, with other measures showing strong gains.
Most homes sold last month were in the $300,000 to $749,000 price range. There were 451,000 new homes in total on the market at the end of November, up from 440,000 in October. At November’s sales pace, it would take 9.2 months to clear the supply of homes on the market, up from 7.9 months in October.