In December, sales of new single-family houses in the United States grew for the third consecutive month as mortgage rates continued to fall, providing hope that the troubled housing market was beginning to stabilize.
Last month, the Commerce Department reported that new house sales rose 2.3% to a seasonally adjusted annual rate of 616,000 units. The sales rate for November was reduced down to 602,000 units from the previously announced 640,000 units.
The Midwest and South, which are traditionally seen as cheap regions, had an increase in sales. They dropped in the Northeast and the West. Reuters polled economists who predicted that new home sales, which account for a minor portion of U.S. home sales, would decline to a rate of 617,000 units. In December, sales fell 26.6% annually. In 2022, they declined by 16.4%.
The housing market has entered a recession due to the Federal Reserve’s quickest rate-hiking cycle since the 1980s. However, falling mortgage rates have increased optimism that the housing market will stabilize soon, albeit at depressed levels.
According to data from home finance firm Freddie Mac, the average 30-year fixed mortgage rate decreased to 6.13% from 6.15% previous week, the lowest level since mid-September.
The rate has decreased from a fourth-quarter average of 7.08 percent, which was the highest since 2002. However, it remains significantly higher than the 3.56% average for the same period previous year.
The median price of a new home in December was $442,100, a 7.8% rise from the previous year. In December, there were 461,000 new homes on the market, the same number as in November. 63.1 percent of the inventory consisted of houses under construction, while 21.5 percent consisted of unbuilt residences.
15.4% of the inventory consisted of completed homes, far below the long-term average of 27%.
At December’s sales rate, the housing inventory would be depleted in 9.0 months, down from 9.2 months in November.
»New home sales increase for the third consecutive month as mortgage rates fall«