Sales of new U.S. homes unexpectedly rose in November, suggesting some stabilization in demand as mortgage rates eased late in the month from their highs.
Purchases of new single-family homes increased 5.8% to an annualized 640,000 pace last month after rising in October, government data showed Friday. The median estimate in a Bloomberg survey of economists called for a 600,000 rate.
A mid-month retreat in 30-year mortgage rates back below 7% along with an increase in builder incentives may have helped support demand. Still, the sales data are volatile from month to month. With home prices remaining elevated and the Federal Reserve poised to raise interest rates further, headwinds for the housing market will persist into 2023.
The increase in sales last month was concentrated in the West and Midwest.
The report, produced by the Census Bureau and the Department of Housing and Urban Development, showed the median sales price of a new home was up 9.5% from a year earlier to $471,200.
There were 461,000 new homes for sale as of the end of last month, though the grand majority remain under construction or not yet started. The number of homes sold in November and awaiting the start of construction — a measure of backlogs — rose to the highest since the beginning of the year.
However, the number of completed homes that were for sale during November increased for an eighth month to the highest since June 2020.
Separate data out earlier this week pointed to a depressed housing market. US homebuilder sentiment dropped for a 12th-straight month, while new construction declined and single family existing-home sales dropped to their lowest level in over a decade.
New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close.
The new-homes data are volatile; the report showed 90% confidence that the change in sales ranged from a decline of 16.9% to an increase of 28.5%.