The FINANCIAL — Sales of newly built U.S. homes rose last month and are on track for a solid 2015, though sales growth has softened in recent months, according to Nasdaq.
Purchases of new single-family homes increased by 4.3% to a seasonally adjusted annual rate of 490,000 in November, the Commerce Department said on December 23.
October’s sales pace was revised down to 470,000 from an earlier estimate of 495,000; economists surveyed by The Wall Street Journal had expected a November sales pace of 504,000.
New-home sales in November were up 9.1% from a year earlier. Sales rose 14.5% in the first 11 months of 2015 compared with the same period in 2014. Still, the pace of new-home sales has trended down since early 2015, averaging 467,000 over the past three months versus 517,000 in the first three months of the year.
“The new-home sales series has been choppy lately, but it looks like the trend has been softening since the peak of the expansion reported for February,” J.P. Morgan Chase economist Daniel Silver said in a note to clients. “Some other sales-related measures have also been soft lately, but we still think that the housing market will continue to recover over time.”
Sales of newly built homes account for only about 10% of the U.S. housing market, and data on new-home sales are volatile and subject to frequent revisions. In Wednesday’s report, the margin of error on November’s 4.3% monthly sales gain was 11.9 percentage points. There was a margin of error of 20.9 percentage points for the annual gain of 9.1%.
Sales of previously owned homes plunged in November, falling 10.5% from the prior month to a seasonally adjusted annual rate of 4.76 million, the slowest sales pace for existing homes since April 2014, the National Association of Realtors said Tuesday.
Lawrence Yun, the Realtors group’s chief economist, attributed much of last month’s sales decline to new government regulations that he said have delayed closings. The Consumer Financial Protection Bureau in October introduced new mortgage forms and a requirement that lenders must give borrowers the final terms of a loan at least three business days before closing.
News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.
The November new-home sales data “add to the evidence that the sudden weakening in existing home sales was due to delays caused by new mortgage disclosure rules and not a change in the trend,” High Frequency Economics chief U.S. economist Jim O’Sullivan said in a note to clients. “The new rules have delayed home sale closings, not initial agreements—existing home sales are based on closings, while new-home sales are based on initial agreements.”
It has been a solid year for residential construction, though home building remains far below prerecession levels. Housing starts rose 11% in the first 11 months of 2015 compared with the same period in 2014, the Commerce Department said last week.
“Housing has been recovering very slowly,” Federal Reserve Chairwoman Janet Yellen said last week. “But the demographics would point to considerable upside for residential investment. My mainline forecast is for gradual recovery, but there is upside risk there.”
The Fed last week raised its benchmark short-term interest rate for the first time in nearly a decade, but signaled it plans to increase rates only gradually in the coming months and years, which could help blunt the impact on the housing sector. The average interest rate on a 30-year fixed-rate mortgage was 3.97%, Freddie Mac said last week, near historical lows.
According to Wednesday’s report, there were 5.7 months of newly constructed homes available for sale in November at the current sales pace, down slightly from October’s 5.8-month supply.
The median price for new homes sold in November was $305,000, up 0.8% from a year earlier.