US new home sales rebound in December as mortgage rate retreat
A «sold» sign is seen outside of a recently purchased home in Washington, U.S., July 7, 2022. REUTERS/Sarah Silbiger/File Photo
WASHINGTON (Reuters) — Sales of new U.S. single-family homes increased strongly in December, boosted by declining mortgage rates and a persistent shortage of previously owned houses on the market.
New home sales rebounded 8.0% to a seasonally adjusted annual rate of 664,000 units last month, the Commerce Department’s Census Bureau said on Thursday. November’s sales pace was revised higher to 615,000 units from the previously reported 590,000 units.
Economists polled by Reuters had forecast new home sales, which account for about 15% of U.S. home sales, rising to a rate of 645,000 units. New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis. Sales increased 4.4% on a year-on-year basis in December. About 668,000 new homes were sold in 2023, up 4.2% from 2022.
Monthly sales rose in the Northeast, Midwest and the densely populated South, but fell in the West.
The rate on the popular 30-year fixed-rate mortgage has tumbled from a 23-year high of 7.79% in late October. It averaged 6.60% last week, the lowest level since May, and was down from 6.66% in the prior week, according to data from mortgage finance agency Freddie Mac.
The median new house price in December was $413,200, a 13.8% decline from a year ago, reflecting price cuts by builders to attract buyers. Overall house prices are, however, rising as supply remains tight. According to the National Association of Realtors, existing homes inventory remains well below the nearly 2 million units before the COVID-19 pandemic.
The bulk of the houses sold last month were in the $200,000 to $749,000 price range. There were 453,000 new homes on the market at the end of December, up from 449,000 in November.
At December’s sales pace it would take 8.2 months to clear the supply of houses on the market, down from 8.8 months in November.
