WASHINGTON Dec 23 New U.S. single-family home
sales rose more than expected in November, reaching their
highest level in four months, likely as expectations of higher
mortgage rates drew buyers into the market.
The Commerce Department said on Friday new home sales
increased 5.2 percent to a seasonally adjusted annual rate of
592,000 units last month. October's sales pace was unrevised at
Economists polled by Reuters had forecast single-family home
sales, which account for about 9.5 percent of overall home
sales, rising 2.1 percent to a 575,000-unit rate last month.
New home sales, which are derived from building permits, are
volatile on a month-to-month basis and subject to large
revisions. Sales were up 16.5 percent from a year ago.
Mortgage rates have been rising rapidly in the wake of
Donald Trump's victory in the Nov. 8 U.S. presidential election,
which economists say could be pulling procrastinators into the
market in fear of further increases in borrowing costs.
A report on Wednesday showed sales of previously owned homes
rose to a near 10-year high in November. Trump's plan to boost
infrastructure spending and cut taxes is expected to stoke
Since the election, the interest rate on a fixed 30-year
mortgage has increased more than 70 basis points to an average
of 4.30 percent, the highest level since April 2014, according
to data from mortgage finance firm Freddie Mac.
Mortgage rates are likely to rise further after the Federal
Reserve raised its benchmark overnight interest rate last week
by 25 basis points to a range of 0.50 percent to 0.75 percent.
The U.S. central bank forecast three rate hikes for next year.
Higher borrowing costs come at a time when house price
increases are outstripping wage gains, which could make
purchases unaffordable for many first-time buyers. But
economists see a marginal impact on home sales, as a labor
market that is nearing full employment is expected to drive
New single-family homes sales were unchanged in the
Northeast and surged 43.8 percent in the Midwest to their
highest level since October 2007. Sales fell 3.1 percent in the
South, but jumped 7.7 percent in the West to their highest level
since January 2008.
Despite the rise in sales last month, the inventory of new
homes on the market increased 1.6 percent to 250,000 units, the
highest level since September 2009. The rise in inventory, if
sustained, could slow the pace of house price increases.
At November's sales pace it would take 5.1 months to clear
the supply of houses on the market, down from 5.2 months in
October. A six-month supply is viewed as a healthy balance
between supply and demand.
(Reporting by Lucia Mutikani; Editing by Paul Simao)