Purchases of new homes unexpectedly surged in November to the highest level since before the last recession, indicating resilient demand, according to government data.
Single-family home sales jumped 17.5% month-over-month to a 733,000 annualized pace (the estimate was for 655,000), the fastest since July 2007, from a 624,000 rate (revised from 685,000), according to the report released jointly by the Census Bureau and the Department of Housing and Urban Development.
The monthly percentage increase was the biggest since January 1992. Purchases in the West and South rose to the fastest rates since 2007. The median sales price increased 1.2% year-over-year to $318,700.
The report showed that residential construction will increase in coming months and provide fuel for the economy. In another sign builders will stay busy, the number of properties sold in which construction hadn't yet started increased almost 43% to 258,000 in November, the most since December 2006.
While stronger results in the South probably reflected some boost from post-hurricane recovery efforts in the region, sales surged in the western U.S. and also increased in the Midwest and Northeast.
Housing demand is benefiting from a strong job market and still low mortgage costs. New-home sales, tabulated when contracts get signed, account for about 10% of the market. They're considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors.
“This is a barn-burner of a report," said Carl Riccadonna of Bloomberg Economics. "While there is likely some upward bias coming from the South due to hurricane recovery, the surge in the West and solid gain in the Northeast, as well, likely signal some homeowners rushing to close deals before new tax changes take effect in 2018.
"This year-end scramble will likely carry into the December data, as well. The risk is that it is pulling demand forward into 2017, and could then lead to prolonged soft patch in early 2018. Inventory scarcity will be a positive development for homebuilders in the near term," he said.
The supply of homes at the current sales rate fell to 4.6 months from 5.4 months. There were 283,000 new houses were on market at end of November, the Commerce Department said.
