The numbers: U.S. new home sales rose 5.8% to a seasonally-adjusted rate of 640,000 in November, from a revised 605,000 in the prior month, the Commerce Department reported Friday.
The November sales figure beat analyst estimates. Analysts polled by the Wall Street Journal had forecast new home sales to come in at 600,000 in November.
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 15.3%.
New home sales rose a revised 8.2% to 605,000 in October, compared with the initial estimate of a 7.5% increase to 632,000.
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 November was $471,200, down from $484,700 in October.
The supply of new homes for sale fell by 7.5% between October and November, equating to an 8.6-month supply.
Regionally, the West led the U.S. in the number of new homes sold, with new homes sold surging by 27.6%, followed by the Midwest.
Sales of new homes dropped in the Northeast and the South this November.
Big picture: 7% mortgage rates didn’t put a damper on new home sales, as seen in today’s report.
New home sales jumped in November, likely as buyers wanted to take advantage of incentives that builders are offering, from mortgage rate buydowns to price cuts.
Builders have been gloomy almost all year, fretting about lower traffic.
But with rates coming back down since, expect housing data to improve further.
What are they saying? “I suspect that builders are much more motivated sellers (especially given the surge in financing costs) than current homeowners, who do not want to part with their 3% or lower mortgages,” Stephen Stanley, chief economist at Amherst Pierpont, wrote in a note. “This may explain why new home sales are rising while existing home sales plunge. ”
But overall, sales are still weaker than usual: Stanley noted that combined existing and new home sales in November fell to the lowest level since 2011.
Market reaction: The Dow Jones Industrial Average
DJIA,
and the S&P 500
SPX,
were down in early trading on Friday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose above 3.7%.
Shares of builders, including D.R. Horton, Inc.
DHI,
Lennar Corp
LEN,
PulteGroup Inc.
PHM,
and Toll Brothers Inc.
TOL,
traded lower during morning trading.
