By Ben Leubsdorf
WASHINGTON--New-home sales rose in November and have posted solid growth for the year as a whole, though the recent jump in mortgage rates could restrain home-buying activity headed into 2017.
Purchases of newly built single-family houses, which account for a small share of overall U.S. home sales, increased 5.2% from October to a seasonally adjusted annual rate of 592,000 last month, the Commerce Department said Friday. That was the largest one-month gain and the highest level for sales since July.
Economists surveyed by The Wall Street Journal had expected a smaller November gain to a sales rate of 580,000. October's sales pace was left unrevised at 563,000.
Data on new-home salescan be extremely imprecise and volatile from month to month. November's 5.2% sales increase came with a margin of error of 14.1 percentage points.
More broadly, 2016 has seen decent growth in the market for new single-family homes. Sales in the first 11 months of the year were up 12.7% compared with the same period in 2015.
At the current sales pace, it would take 5.1 months to exhaust the supply of newly built homes on the market at the end of November. The median sale price last month was $305,400, down from $317,000 in November 2015.
Sales of previously owned houses account for about 90% of U.S. home purchases. The National Association of Realtors on Wednesday reported existing-home sales in November rose 0.7% from the prior month to a seasonally adjusted annual rate of 5.61 million, the strongest sales pace since February 2007.
News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the NationalAssociation of Realtors.
But after years of ultra-low interest rates that have supported home-buying activity and price growth, borrowing costs have marched higher since the Nov. 8 presidential election and as the Federal Reserve moves forward with its plan to gradually boost short-term interest rates. The U.S. central bank last week raised its benchmark federal-funds rate for just the second time since the 2007-09 recession.
The average interest rate on a 30-year fixed-rate mortgage in November was 3.77%, up from 3.47% the prior month, according to Freddie Mac. Rates have risen further in December; Freddie Mac reported Thursday the average rate was 4.30%, the highest level since April 2014.
Still, Miami-based home builder Lennar Corp. said this week it expected further gains for the housing sector in 2017 thanks in large part to continued growth in the broader U.S. economy.
"Even with interest rates moving higher, the first-time home buyer will continue to come back to the market as stronger economic conditions should drive purchasers to the market, undeterred by the marginally higher monthly payment especially in the context of continued rent increases," Chief Executive Stuart Miller told analysts on Monday. "Lower unemployment, wage growth and general consumer confidence should drive household formation, which drives families to purchase homes and to rent apartments."
The Commerce Department's latest report on new-home sales can be accessed at: https://www.census.gov/construction/nrs/pdf/newressales.pdf
Write to Ben Leubsdorf at email@example.com
(END) Dow Jones Newswires
December 23, 2016 10:15 ET (15:15 GMT)
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