Sales of new single-family homes in the U.S. rose for a second month in a row in November as Americans took advantage of lower mortgage rates and desperate homebuilders, but the overall housing market remains depressed.
New home sales rose 5.8 percent last month to a seasonally adjusted annual rate of 640,000, the Commerce Department said Friday. The October sales pace was revised lower to 605,000 from the previously reported 632,000.
Sales rose in the Midwest and West, but fell in the Northeast and the densely populated South.
Economists polled by Reuters had forecast new home sales, which make up a small share of U.S. home sales, to fall to 600,000 in November. Sales decreased by 15.3% year-on-year.
The National Association of Home Builders reported this week that 62 percent of builders used incentives to attract buyers in December, including offering mortgage rate buybacks, buyer down payments and price reductions.
The Federal Reserve’s fastest rate-hiking cycle since the 1980s, aimed at curbing inflation, has dampened demand for housing.
Reports this week showed sentiment among single-family homes fell to a record low on Dec. 12.
Single-family home starts and building permits fell to a 2-1/2-year low in November, while sales of previously owned homes fell for the 10th consecutive month, the longest since 1999.
The average rate on a 30-year fixed-rate mortgage fell to 6.27% this week, the highest since 2002, after peaking above 7% a few months ago. However, this rate is more than double what it was a year ago. , showed data from mortgage finance agency Freddie Mac.
The median new home price in November was $471,200, a 9.5% increase from last year. There were 461,000 new homes on the market at the end of last month, down from 469,000 in October. Houses under construction made up 62.9 percent of the inventory, and houses under construction made up 23.2 percent.
Built homes accounted for 13.9% of inventory, well below the long-term average of 27%. At November’s sales pace, it will take 8.6 months to clear the supply of homes on the market, down from 9.3 months in October.
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