The numbers: U.S. new home sales rose 2.3% to a seasonally-adjusted rate of 616,000 in December, from a revised 602,000 in the prior month, the Commerce Department reported Thursday.
This is the third month in a row that new home sales have risen. Existing-home sales, on the other hand, continue their downward streak.
The December sales figure beat analyst estimates slightly. Analysts polled by the Wall Street Journal had forecast new home sales to come in at 615,000 in December.
The sales of new homes are below a peak of 1.04 million in August 2020.
Year-over-year, new home sales are still down by 26.6%.
New home sales rose a revised 0.7% to 602,000 in November, compared with the initial estimate of a 5.8% increase to 640,000.
The new home sales data are volatile month-on-month and are often revised.
Key details: The median sales price of a new home sold in December was $442,100.
The supply of new homes for sale fell by 2.2% between November and December, equating to a 9-month supply.
Regionally, the Midwest led the U.S. in the number of new homes sold, with new homes sold surging by 35.2%, followed by the South.
Sales of new homes dropped in the Northeast by 19.4% and the West by 15.3%.
Looking at 2022 overall, 644,000 new homes were sold, the government says. In 2021, 771,000 new homes were sold.
Big picture: Mortgage rates are falling, but there’s a shortage of homes available for sale for eager home buyers.
Since home builders are one of the biggest contributors at the present moment to the housing supply, they’re seeing a jump in sales. Existing-home sales, on the other hand, are down as homeowners sit on homes with ultra-low mortgage rates.
Builders are also successfully moving inventory by offering deals, like mortgage rate buydowns and other concessions.
What are they saying? Yes, new homes sales rose, but they form a “very small part of overall home sales,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note. “Existing home sales have remained very weak.”
High mortgage rates continue to hit affordability, she added, which continues to weigh heavily on home sales.
Market reaction: The Dow Jones Industrial Average
and the S&P 500
were mixed in early trading on Thursday. The yield on the 10-year Treasury note
fell below 3.5%.
Shares of builders, including D.R. Horton, Inc.
and Toll Brothers Inc.
opened higher during morning trading.