Sales of new construction homes built in the U.S. rose last month, capping the best year for new home sales since 2007!
Purchases of new single-family homes increased by 10.8% to a seasonally adjusted annual rate of 544,000 in December, the Commerce Department said Wednesday.
Economists surveyed by The Wall Street Journal had expected a December sales pace of 502,000.
New home sales in 2015 reached an estimated 501,000, not seasonally adjusted. That marks their highest annual level since 776,000 new homes sold in 2007, underscoring the long slog back from the housing bust.
Nationwide, the pace of new-home sales growth in December was up 9.9% from a year earlier, the Commerce Department said.
Purchases of new homes are only about a tenth of all home sales, and the data are choppy. However, the construction sector added jobs in December as rising consumer confidence, low mortgage rates and low inventory helped spur new-home sales over recent months. Home builder D.R. Horton Inc. on Monday said its profit and revenue rose in the latest quarter as orders climbed.
Although the Federal Reserve raised its benchmark interest rate from near zero in December, borrowers are yet to feel the pinch from higher mortgage rates. A 30-year fixed-rate mortgage averaged 3.81% in the week ending Jan. 21, Freddie Mac said, down from a 3.92% rate a week earlier.
There were 5.2 months’ supply of newly built homes in December, down from 5.7 months in November. The median sales price of new homes was $288,900, down from $305,000 in November.
Data on new-home sales are volatile and subject to frequent revisions. In Wednesday’s report, the margin of error on December’s 10.8% monthly sales gain was plus or minus 17.1 percentage points. There was a margin of error of 25 percentage points for the annual gain of 9.9%.
Sales of previously owned homes—the bulk of the market—reached their best sales level in eight years in 2015. Sales of previously owned homes rose 14.7% in December, the National Association of Realtors said Friday. That market has been challenged by rising prices and low inventories.
The market for new homes is hardly robust, with new-home sales still far from their July 2005 peak of 1.4 million annualized. But the latest pickup in demand, along with low inventory levels, is boosting hopes that builders will ramp up construction this year, a development that would likely lift the broader economy to stronger growth.
U.S. home builders continue to report high levels of confidence. The National Association of Home Builders’ sentiment index stayed at 60 in January, unchanged on the month at a high level, the group said last week.
If you are in the market to purchase a new home, The Keri Shull Team can meet any of your real estate needs – rather it’s your first time buying, you’re an experienced property investor, planning to sell, or even looking to rent. Contact us today!