New, Pending Sales See Boost In November

ByTMN Editor Reading Time: 2 minutes

Both new and pending home sales saw a significant boost in November as inventory corrected and buyers adjusted to 6%-plus interest rates.

New home sales increased a whopping 5.9% to a seasonally adjusted annual rate of 664,000, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. Year-over-year, they are up 8.7%.

New home sales data can change drastically on the month as they’re based on contract signings. This month lined up with expectations from economists surveyed by Bloomberg.

At the same time, inventory rebounded to its highest level since 2007.

At the end of the month, 490,000 new homes were for sale. At the current rate, this represents an 8.9-month supply.

The median sales price of new houses sold was $402,600, while the average was $484,800. Sale prices are falling in some metros as inventory increases, but appreciation remains strong nationwide.

Pending sales continued an upward trend spanning four consecutive months.

NAR’s Pending Home Sales Index increased 2.2% from October to a reading of 79.0. An index of 100 equals the level of contract activity in 2001, when NAR began tracking this data.

Year-over-year, sales rose 6.9%.

“Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” said NAR Chief Economist Lawrence Yun.

“Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”

Existing homes, which tend to be cheaper than new construction, saw a sales boost last month as inventory improved, rising 4.8% to a seasonally adjusted annual rate of 4.15 million.

This is the first time in six months that the rate has surpassed four million.

At the same time, the job market is faring well and unemployment is projected to stay historically low through next year. Potential buyers have a steady paycheck to add to sky-high equity, providing a stable financial path to a new home.