A report released by the Commerce Department on Wednesday showed new home sales in the U.S. surged much more than expected to a nine-month high in the month of December.
The Commerce Department said new home sales soared by 11.9 percent to an annual rate of 811,000 in December after spiking by 11.7 percent to a revised rate of 725,000 in November.
Economists had expected new home sales to jump by 2.2 percent to a rate of 760,000 from the 744,000 originally reported for the previous month.
With the much bigger than expected increase, new home sales reached their highest annual rate since hitting 873,000 last March.
The report showed new home sales in the Midwest helped lead the way higher, skyrocketing by 56.4 percent to an annual rate of 86,000.
New home sales in the South also surged up by 14.9 percent to a rate of 456,000, while home sales in the West edged up by 0.4 percent to a rate of 242,000 and home sales in the Northeast plunged by 15.6 percent to a rate of 27,000.
The Commerce Department also said the median sales prices of new houses sold in December was $377,700, down 9.2 percent from $416,100 in November but up 3.4 percent from $365,300 a year ago.
The estimate of new homes for sale at the end of December was 403,000, representing 6.0 months of supply at the current sales rate.
“We expect new home sales to be about flat for the year in 2022,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. “Demand should remain strong, but supply is expected to increase only gradually and the run-up in prices prior to December along with the more recent rise in mortgage rates will side-line many prospective buyers.”
Last Thursday, the National Association of Realtors released a separate report showing U.S. existing home sales declined in December, snapping a streak of three straight months of gains.
NAR said existing home sales plunged by 4.6 percent to an annual rate of 6.18 million in December after jumping by 2.2 percent to a ten-month high of 6.48 million in November.
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