New Home Sales Jumped in November to 7-Month High
New home sales rose in November to a seven-month high, figures from the Commerce Department showed today in Washington.
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Purchases of single-family properties increased 1.6 percent to a 315,000 annual pace, pushing the number of new homes on the market to a record low.
Despite another wave of foreclosures threatening to weigh on real estate values next year, builder confidence has improved and inventories of existing homes have declined, according to recent reports.
“New-home sales look flat for the year but an improving economic backdrop suggests a gradual pickup in buying,” Ryan Sweet, a senior economist at Moody’s Analytics Inc., said before the report. “Data for the month send a positive message about demand.”
The increase in new home purchases was paced by a 12.9 percent jump in the South and a 7.4 percent gain in the Midwest, while sales in the Northeast plunged 26.3 percent to the lowest on record, and sales in the West slumped 16.9 percent.
The median price of a new house purchased in November fell 2.5 percent compared to the year earlier to $214,100, the cheapest in a year.
The supply of homes available at the current sales rate dropped to 6 months’ worth, the lowest since March 2006, from 6.2 months in October. At the end of November, there were just 158,000 new houses on the market, the fewest since record-keeping began in 1963.
This year may surpass 2010 as the weakest ever for new-home sales. Demand in 2010 was 323,000, while this year it is on pace to reach just 304,000.
But as demand shifts to previously owned houses, new-home sales have lost their ability to forecast the broader market. Purchases of existing homes are calculated when a deal closes about a month or two after the contract is signed, while new-home sales are tabulated when contracts are signed.
Still, builders are growing more confidence in the housing recovery. Housing starts rose 9.3 percent to a 685,000 rate in November, their fastest pace since April 2010 — that compares to last year’s tally of 587,000, the second-fewest on record after a record low of 554,000 set in 2009.