Sales of new U.S. single-family homes fell modestly in November from a five-year high and prices pushed higher, indicating the housing market is weathering higher mortgage rates.
The Commerce Department said on Tuesday sales fell 2.1 per cent to a seasonally adjusted annual rate of 464,000 units. Despite the fall from October’s revised 474,000 pace, which was the highest level since July 2008, home sales retained the bulk of the previous month’s revised 17.6 per cent increase.
Sales had previously been reported to have increased 25.4 per cent in October but to a 444,000 annual pace.
Economists had expected new home sales, which are measured when contracts are signed, to show a 445,000 unit pace in November. Compared with November last year, sales were up 16.6 per cent.
Higher mortgage rates have slowed the pace of home resales since August, but activity is expected to accelerate next year, driven in part by employment gains.
Continued recovery in household formation from multi-decade lows, against the backdrop of lean housing inventory, is also expected to boost activity.
Last month, the supply of houses on the market fell 6.7 per cent. The median price of a new home rose 10.6 per cent from a year ago.
At November’s sales pace it would take 4.3 months to clear the supply of houses on the market, the fewest since June. That was down from 4.5 months in October. A supply of 6.0 months is normally considered as a healthy balance between supply and demand.
Sales fell in the Midwest and South, but posted strong gains in the West and Northeast.