US Home Sales Rise 8% in December, Mortgage Rates Drop

Summary

  • New home sales increased by 8.0% last month to reach an annual rate of 664,000 units, adjusted seasonally, as reported by the Commerce Department’s Census Bureau.
  • Sales can be unsteady on a month-to-month basis but exhibited a 4.4% rise on a year-on-year context in December, with around 668,000 new homes sold in 2023, a 4.2% increase from 2022.
  • Improved sales were seen in the Northeast, Midwest and the South. However, the West experienced a fall.
  • The popular 30-year fixed-rate mortgage’s rate dropped from a high of 7.79% to an average of 6.60% last week, the lowest since May.
  • New home median cost was $413,200 in December, showing a 13.8% drop from a year ago. However, total house prices are going up due to the continuing tight supply.
  • In December, most homes that were sold ranged from $200,000 to $749,000. The total new homes in the market at the end of December were 453,000, an increase from 449,000 in November.

Details on Sales Rebound

There was a rejuvenation in new home sale, witnessing an 8.0% escalation last month equating to a seasonally modified annual rate of 664,000 units, as revealed by the Census Bureau of the Commerce Department. The sales pace of November witnessed a revision to 615,000 units from the latterly reported 590,000 units.

Sales: A Yearly Review

While sales can display a temperamental behaviour on a monthly basis, they demonstrated an uplift of 4.4% from a year-on-year perspective in December. It is estimated that 668,000 new homes were purchased in 2023, presenting a 4.2% leap from 2022.

Regional Sales Report

Sales demonstrated an upward trend in the Northeast, Midwest, and South, which has a dense populace. However, a downfall was observed in the West.

Mortgage Trends

The interest rate on the widely used 30-year fixed-rate mortgage descended from a peak of 7.79% to average 6.60% in the previous week, the lowest since May, demonstrating a decrease from 6.66% according to the data from mortgage finance organization Freddie Mac.

Current Pricing Trends

The median price of a new house in December stood at $413,200, registering a 13.8% fall from the previous year, indicating builder price cuts to entice buyers. However, overall house prices are escalating due to the ongoing tight supply. Inventory for existing homes remains significantly lower than the almost 2 million units prior to the COVID-19 pandemic, as reported by the National Association of Realtors.

Pricing Overview

The majority of houses sold last month were valued between $200,000 and $749,000. At the end of December, there were 453,000 new homes available in the market, up from 449,000 in November.

Inventory Insights

Considering December’s sale pace, it would require 8.2 months to clear the existing housing inventory, a decrease from the 8.8 months required in November.

These trends in the housing market can influence forex or trading, particularly related to assets tied to the real estate market or mortgage-backed securities.

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