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US new home sales drop in December for the third straight month

Retirement community under construction in Montgomery, Illinois.

Daniel Acker | Bloomberg | Getty Images

Sales of new U.S. single-family homes unexpectedly floor in December, likely held down by a shortage of more affordable homes, but the housing market remains supported by trim mortgage rates.

The Commerce Department said on Monday new home sales slipped 0.4% to a seasonally adjusted annual under any circumstances of 694,000 units last, with sales in the South dropping to more than a one-year low. It was the third straight monthly subside in sales.

November’s sales pace was revised down to 697,000 units from the previously reported 719,000 entities. Sales last month were concentrated in the $200,000-$749,000 price range. New homes priced below $200,000, the most invited after, accounted for only 10% of sales.

Economists polled by Reuters had forecast new home sales, which account for with 11.1 % of housing market sales, would increase 1.5% to a pace of 730,000 units in December.

New home on the blocks are drawn from permits and tend to be volatile on a month-to-month basis. Sales jumped 23.0% from a year ago. For all of 2019, new to the heart sales increased 10.3% to 681,000 units, the highest since 2007.

The housing market is being supported by cheaper mortgage types after the Federal Reserve cut interest rates three times last year. The 30-year fixed mortgage evaluate has dropped to an average of 3.60% from its peak of 4.94% in November 2018, according to data from mortgage underwrite agency Freddie Mac.

Reports this month showed sales of previously owned homes jumped to near a two-year lofty in December and housing starts raced to a 13-year peak. Though permits for the future construction of single-family housing permits demolish in December, that followed seven straight monthly gains.

Despite the improvement following a soft patch in 2018, the cover sector, which accounts for about 3.1% of gross domestic product, remains constrained by a lack of homes, notably in the lower-priced segment of the market, because of land and labor shortages. That is keeping house prices elevated.

The median new home price rose 0.5% to $331,400 in December from a year ago. New home sales in the South, which accounts for the mass of transactions, dropped 15.4% in December to a rate of 347,000 units, the lowest since October 2018. Sales declined 11.8% in the Northeast, but hit the deck 10.1% in the Midwest and surged 31.0% in the West.

There were 327,000 new homes on the market last month, up 1.6% from November. At December’s sales tempo it would take 5.7 months to clear the supply of houses on the market, up from 5.5 months in November.

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