Sales of newly built homes jumped in November by the largest amount in twenty-five years surging to the fastest selling rate since before the recession.
The U.S. Census Bureau reported that purchases of new homes rose 17.5 percent, their biggest single month gain since January 1992, to an annualized selling rate of 733,00. It was the quickest pace since July 2007 and far-outstripped the median forecast of 645,000 and an expected percentage decline of 4.7 percent.
While new homes are a just ten percent of the total housing sales they are often seen as an indicator of the health of the larger market and particularly the intentions of builders and construction firms. Because a large percentage of new home contracts are with first time buyers who tend to have fewer financial resources, these are considered a timely indicator of the health of the general economy.
This result mirrors the strong tenor of the overall housing market. Sales of existing homes in November rose to an eleven year high, climbing 5.6 percent to 5.81 million units, thier best level since December 2006.
Housing demand has been supported by a robust job market, low mortgage rates, record equity levels and the improvement in consumer and business sentiment over the past year. It is likely that the tax reform bill signed on Friday by President Trump will add to the optimism in the housing sector.
Sales rose in all four U.S. geographic regions, led by purchases in the South and West which were the strongest in ten years. The Midwest and Northeast saw smaller gains. The median selling prices increased 1.2 percent over the year to $318,700. The supply of new homes on the market fell to 283,000 a 4.6 month inventory, down from 5.4 months in October.
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New Home Sales
New Home Sales Percentage Change