New home sales unexpectedly slumped in November, led by a sharp drop in the South and suggesting a bumpy road to recovery for the housing market.
Purchases of new single-family homes decreased 12.2% to a 590,000 annual pace last month, a one-year low, government figures showed Friday. The median forecast in a Bloomberg survey of economists called for a 690,000 rate.
The decline in sales may represent a temporary setback for a housing market that is otherwise on the mend. Reports earlier in the week showed a six-month high in
"Especially when weighed against the high new home starts number released earlier this week, low new home sales in November aren't particularly significant," Robert Frick, corporate economist at Navy Federal Credit Union, said in a note. "The new home market is shaping up to have a good 2024, with already high inventories and more in the pipeline. When rates come down next year, there will be a surge in sales."
The outlook for the new-homes market has brightened as 30-year mortgage rates are back below 7% amid expectations the Federal Reserve is poised to cut borrowing costs next year. In addition, builders are taking advantage of lean inventories in the resale market and luring buyers with incentives such as subsidized mortgage rates and price cuts.
The government's report on Friday showed the median sales price of a new home fell 6% from a year ago to $434,700.
New-housing inventory increased in November for the fourth consecutive month, to the highest level in nearly a year.
Sales decreased nearly 21% in the South, the largest US region, to the lowest level since April 2020. Purchases also dropped in the West.
New-home sales are considered a more timely gauge than purchases of previously-owned homes, which are calculated when contracts close. Existing-home sales increased by 0.8% in November from a month earlier, when they dropped to the lowest level since 2010.
The new-homes data are volatile, however. The report showed 90% confidence that the change in sales ranged from a 27.8% decline to a 3.4% gain.
