U.S. new home sales miss expectations in December

FILE PHOTO: A newly constructed single family home is shown as sold in Encinitas, California, U.S., July 31, 2019. REUTERS/Mike Blake/File Photo GLOBAL BUSINESS WEEK AHEAD

WASHINGTON (Reuters) – Sales of new U.S. single-family homes rose less than expected in December, likely restricted by a jump in home prices.

New home sales increased 1.6% to a seasonally adjusted annual rate of 842,000 units last month, the Commerce Department said on Thursday. November’s sales pace was revised down to 829,000 units from the previously reported 841,000 units.

Economists polled by Reuters had forecast new home sales would rebound 1.9% to a rate of 865,000 units in December. New home sales are drawn from a sample of houses selected from building permits and tend to be volatile on a month-to-month basis. New home sales jumped 15.2% on a year-on-year basis. Sales totaled 811,000 in 2020, up 18.8% from 2019.

The government reported last week that housing starts soared in December to their highest level since September 2006. Permits for future homebuilding were also the highest since August 2006. But surging lumber prices and labor and land shortages could slow the housing market momentum.

The housing market is being supported by cheaper mortgages and an exodus from city centers to suburbs and other low-density areas as companies allow employees to work from home and schools shift to online classes because of the coronavirus pandemic. About 23.7% of the labor force is working from home. Lower-wage earners in the services sector have borne the brunt of the COVID-19 crisis.

The 30-year fixed mortgage rate is around 2.77%, according to data from mortgage finance agency Freddie Mac.

In December, new home sales rose in the Midwest and West, but fell in the Northeast and South.

The median new house price surged 8% to $355,900 in December from a year ago. There were 302,000 new homes on the market last month, up from 290,000 in November. At December’s sales pace it would take 4.3 months to clear the supply of houses on the market, up from 4.2 months in November.

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