Sales of new U.S. single-family homes saw a notable rebound last month following a dip in October caused by hurricanes. New home sales rose 5.9 percent to a seasonally adjusted annual rate of 664,000 units last month, according to the Department of Commerce’s Census Bureau. The bureau also revised October sales up to 627,000 units from the previous 610,000.
Year-on-year, sales of new U.S. single-family homes increased 8.7 percent from the November 2023 estimate of 611,000.
Rising mortgage rates to impact demand
Despite the strong recovery in sales last month, rising mortgage rates may impact new U.S. home sales next year. The 30-year fixed-rate mortgage rose to 6.72 percent last week after falling to 6.60 percent in the prior week, according to data from mortgage finance agency Freddie Mac. Â Mortgage rates are expected to remain above 6 percent over the next two years.
In fact, mortgage rates have risen since the Fed began to slash interest rates in September.
Last week, the Federal Reserve cut interest rates by 25 basis points to the 4.25-4.50 percent range. However, it projected only two rate cuts in 2025 due to higher inflation and economic resilience.
The U.S. central bank cut its easing expectations from September’s forecast of four quarter-point rate cuts in 2025 amid economic uncertainty over President-elect Donald Trump’s potential inflationary policies including tariffs on imported goods, tax cuts and mass deportations of undocumented immigrants.
Median sales price falls
The median sales price of a new U.S. home in November 2024 was $402,600, down from $437,300 in October, while the average sales price reached $484,800.
The seasonally adjusted estimate of new houses for sale at the end of November increased to 490,000 compared to 481,000 in October. This represents a supply of 8.9 months at the current sales rate.
Read: U.K. house prices rise 3.9 percent to record high in October
Existing home sales surge to eight-month high
Meanwhile, U.S. existing home sales surged to an eight-month high in November, rising 4.8 percent last month to a seasonally adjusted annual rate of 4.15 million units, according to the National Association of Realtors. It was the second straight monthly increase in sales since September’s 14-year low.
Sales rose 6.1 percent year-on-year, the largest increase since June 2021. Despite the second consecutive annual increase in sales, the outlook for the existing housing market next year remains lackluster in light of high mortgage rates.
Bank of America Securities expects the average 30-year fixed mortgage rate to remain near 6-6.5 percent next year, which would discourage homeowners from selling their properties, keeping supply tight and house prices high.
Housing inventory fell 2.9 percent to 1.33 million units last month while supply increased 17.7 percent from one year ago. The median existing home price increased 4.7 percent from a year earlier to $406,100 in November.
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