New residential sales hit two-year high in November

Source: Housingwire
By Christina Mlynski

Sales of new single-family homes were at a seasonally adjusted annual rate of 377,000 in November, the highest level since April 2010. New home sales were 4.4% above the revised rate of 361,000 in October, the U.S. Census Bureau and the Department of Housing and Urban Development said on Thursday. New home sales were 15.7% above last year’s estimate of 327,000, another sign that housing is on the mend. The median sales price of new homes sold was $246,200, compared to the median price of $237,000 in October. The average sale price was $299,700. At the end of November, the number of new homes for sale reached 149,000, representing a 4.7-month supply of homes at today’s sales pace. "The new home market is a positive for the economic outlook, especially given that scarcity of supply points to new construction ahead," analysts from Econoday Economic Report said. "But fundamental economic issues right now are being clouded by the approach of the fiscal cliff and the risk that higher taxes will hurt consumers and home buyers," the analysts said. Although home sales increased to year highs, consumer confidence dropped for the second consecutive month because the market is slowly healing on historically low mortgage rates and high housing demand. "Even given the concerns over the fiscal cliff, it’s still not going to stop people who can afford homes and those who can get access to a mortgage," Associated Economist Gregory Bird at Moody's Analytics told HousingWire. The Consumer Confidence Index fell to 65.1 in December, down from 71.5 in November. The Expectations Index also declined sharply to 66.5 from 80.9. "Consumers’ expectations retreated sharply in December resulting in a decline in the overall index. The sudden turnaround in expectations was most likely caused by uncertainty surrounding the oncoming fiscal cliff," said Lynn Franco, director of economic indicators at the Conference Board. Consumers’ optimism about the short-term outlook also declined in December. The percentage of consumers expecting business conditions to improve within the next six months declined to 17.6%, down from 21.3%, while those projecting business conditions to worsen increased from 15.8% to 21.5%. "A similar decline in expectations was experienced in August of 2011 during the debt ceiling discussions,” Franco said. “While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions."

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