Posted on February 19, 2016 - 08:11 AM
by Melson Realty
New U.S. single-family home sales race to a 10-month high
New U.S. single-family home sales surged in December to their highest level in 10 months, the latest indication that the housing sector remains on a firmer footing despite a massive stock market sell-off and slowing economic growth.
The Commerce Department said on Wednesday sales rose 10.8 percent to a seasonally adjusted annual rate of 544,000 units, the highest level since February 2015. Sales last month were likely buoyed by unseasonably mild weather and a rise in the supply of homes on the market, which increased choices for buyers.
New home sales soared 14.5 percent in 2015, the highest level since 2007. Economists had forecast new home sales, which account for about 9.1 percent of the housing market, edging upward to 500,000 units.
In another promising sign, a separate report from the Mortgage Bankers Association showed applications for home purchase loans increased 8.8 percent last week from a week earlier. Mortgage rates remain low by historical standards, even after the Fed’s recent rate hike.
Many national economists feel this is a promising sign for the housing market as we move into 2016. They expect the strong increase in new home sales to continue as the fundamentals in the housing market remain strong and new vintage homes are in short supply.
A firmer housing sector should put a floor under the economy, which has been battered by the headwinds of a strong dollar, spending cuts by energy firms stung by lower oil prices and sluggish global demand. Efforts by businesses to whittle down an inventory bloat have also been a drag on growth.
This month’s stock market sell-off, which has seen a more than 7-percent plunge in the Standard & Poor’s 500 index, is also adding to the pain. But with housing boosting household wealth, the drag on consumer spending from falling stock market values could be minimal.
The government is expected to report that fourth-quarter gross domestic product increased at a 0.8 percent annual rate, according to a Reuters Survey of economists, slowing sharply from the third quarter’s 2 percent.
In December, new home sales jumped 20.8 percent in the Northeast and gained 0.4 percent in the populous South. They advanced 31.6 percent in the Midwest and shot up 21.0 percent here in the West.
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