Sales of New Homes Set a Record in November
Sales of new homes surged 5.7% to a record in November, the government said Friday in a report that defied expectations that the booming housing market would take a breather. Sales in the West, however, fell 3.9%.
Sales of newly built homes climbed to a seasonally adjusted annual rate of 1.07 million units from an upwardly revised 1.01 million in October.
The number trounced forecasts of analysts polled by Reuters, who expected an even 1 million annual rate.
Housing has remained strong in the uncertain U.S. economy as low mortgage rates, coupled with moribund stock markets, have enticed Americans to invest in bricks and beams.
The popular 30-year fixed-rate mortgage fell below 6% in November, a level not seen since the mid-1960s, according to home financing giant Freddie Mac.
Over the last four months, new-home sales have posted their four highest rates ever.
Analysts said the data reflected a mature market that probably would ease in coming months as interest rates go up with a rebounding U.S. economy.
“The housing sector is one of the few shining points right now -- all the other news has been relentlessly bleak,” said John Shin, an economist at Lehman Bros. “Housing is holding up the economy, but you wonder how long it can go on.”
Also, a decline in median sales prices suggests that builders are giving discounts or trimming profit margins to help sustain sales, economists said.
“One of the reasons why they’re keeping demand up is either builders are building cheaper homes or builders are taking a bit of their profit to keep activity going,” said Steve Ricchiuto, chief U.S. economist for ABN Amro.
The median sales price for a new home fell to $167,300 from $168,100 in November a year ago.
There were wide regional swings in sales last month.
While the Midwest was at a high with a rise of 41.2%, sales in the Northeast plunged 26.7%, which followed a 36.8% drop in October.
November sales in the Northeast were at the lowest level since September 1995. In the South, sales climbed 2.4%.
