Sales of new U.S. single-family homes rose for a second straight month in November likely as Americans took advantage of a retreat in mortgage rates and incentives from desperate builders, but the overall housing market remains depressed.
New home sales increased 5.8% to a seasonally adjusted annual rate of 640,000 units last month, the Commerce Department said on Friday. October’s sales pace was revised lower to 605,000 units from the previously reported 632,000.
Sales surged in the Midwest and West, but fell in the Northeast and the densely populated South.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, slipping to a rate of 600,000 units in November. Sales fell 15.3% year on year.
The National Association of Home Builders reported this week that 62% of builders in December were using incentives to woo buyers, including providing mortgage rate buy-downs, paying points for buyers and offering price reductions.
The Federal Reserve’s fastest interest rate-hiking cycle since the 1980s, aimed at quelling inflation, has chilled demand for housing.
Reports this week showed sentiment among single-family building remaining depressed for a record 12th straight month December.
Single-family housing starts and building permits tumbled to a 2-1/2-year low in November, while sales of previously owned homes notched their 10th consecutive monthly decline, the longest such stretch since 1999.
The average rate on a 30-year fixed-rate mortgage dropped to 6.27% this week after vaulting above 7% a few months ago, which the highest since 2002. The rate, however, is more than double what it was this time a year ago, data from mortgage finance agency Freddie Mac showed.
The median new house price in November was $471,200, a 9.5% increase 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. Houses under construction accounted for 62.9% of the inventory, with homes yet to be built making up 23.2%.
Completed houses accounted for 13.9% of the inventory, well below a long-term average of 27%. At November’s sales pace it would take 8.6 months to clear the supply of houses on the market, down from 9.3 months in October.