New-Home Sales Strong in Nov., Inventory at 4.3-month Supply

New-Home Sales Strong in Nov., Inventory at 4.3-month SupplySales of new single-family homes declined 2.1 percent to an annual rate of 464,000 units in November, a slight drop from an upwardly revised strong pace of 474,000 units in the previous month, according to data released Tuesday by U.S. housing and Census Bureau officials.
Not including October 2013, this is the strongest sales pace since July of 2008 — an indication that the housing market is faring well — at least for now — against a backdrop of rising mortgage rates.
With the Federal Reserve’s modest tapering to begin next month, there is much uncertainty overall as to the market’s recovery strength. Mortgage applications overall fell last week by 6 percent, with the refinancing share of applications down to a 5-year low.
The inventory of new homes for sale declined to 167,000 units in November, which is a 4.3-month supply at the current sales pace.
Economists had expected new home sales, which are measured when contracts are signed, to show a 445,000 unit pace in November. Compared with November last year, sales were up 16.6 percent.
“This figure is consistent with NAHB’s member surveys, which show increasing confidence in the market,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. “Meanwhile, the very low supply of new homes on the market and tight credit conditions for home buyers show that builders are still cautious about getting ahead of themselves.”
Regionally, new-home sales were mixed in November. Both the West and the Northeast showed improvement, with respective increases of 31.1 percent and 15.2 percent. New-home sales in the Midwest dropped by 26.6 percent and the South posted a 9.1 percent decline.

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