US home sales rose for the first time in five months in December, the best year since 2006, signaling that record-low mortgage rates continue to drive demand in a sector that was a bright spot in the economy.
New single-family home purchases rose 1.6% in December to 842,000 on an annualized basis from 829,000 in the previous month, government data showed on Thursday. The median projection in a Bloomberg poll was 870,000. The average price rose 8% year over year to $ 355,900.
Housing has helped fuel the economic recovery in the US, thanks to cheap credit and buyers looking for more space during the pandemic. While strength persisted in December, a lack of affordable housing and a sluggish labor market could limit the strength of the sector.
For the full year, sales rose to 811,000, the best level in more than a decade. This is evident from the report jointly published by the Census Bureau and the Department of Housing and Urban Development.
Other data from the last few weeks shows that the property market strengthened in December. Housing starts recently rose to their best pace since late 2006, while existing homes experienced unexpected strength.
Federal Reserve Chairman Jerome Powell on Wednesday described real estate as a ray of hope in the economy, although other sectors have cooled. "The real estate sector has more than fully recovered from the downturn, partly aided by low mortgage rates," he said in a briefing following the recent policymaker meeting.
The report also showed that the number of properties sold that have not yet begun construction rose to 277,000 from 256,000 in the previous month, while the number of properties for sale rose to 302,000, most since May.
At the current rate of sales, it would take 4.3 months to exhaust supply of new homes [up from 4.2 months]. Sales rose across all regions in the West and Midwest, while the South, the largest region, fell to its lowest level since May