US new home sales show record increase in November

Economy - Himanshu Gill - Dec 26,2016

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us new home sales show record increase in november

US single-family home sales rose more than anticipated in the month of November, posting a solid growth rate for the whole year.

According to the Commerce Department, this was the largest one-month gain and the highest level of sales since July. It said that new home sales in November rose by 5.2 percent to a seasonally adjusted rate of 592,000 units. The previously anticipated sales for November stood at 575,000, while October's sales pace was unrevised at 563,000 units. New home sales account for about 9.5 percent of the overall home sales.

Data on new home sales can be utterly imprecise and volatile on a month to month basis. November’s 5.2 percent sales increase came with a large margin of error - 14.1 percentage points. More broadly, 2016 has witnessed a decent growth in the market for new single-family homes - sales in the first 11 months of the year increased by 12.7 percent as compared with the same time period in 2015.

At the current pace of sales, it would take over 5 months to finish the supply of newly built homes on the market at the end of November. The median sale price in November was $305,400, down from $317,000 at the same time in 2015.

However, mortgage rates have been rising rapidly since Donald Trump’s unexpected triumph in the US presidential elections and this, according to economists, could restrain home purchasing activities in 2017. Since the election, the interest rate on a fixed 30-year mortgage has increased by more than 70 basis points to an average of 4.30 percent, the highest level since April 2014, according to the latest available data.

Also, another report from the Commerce Department suggests that the sales of previously owned houses have increased to nearly a 10 year high in November.