US New Home Sales Drop 12.2% to Lowest Since Nov 2022, Mortgage Rates Fall

Summary

  • Last month, new home sales decreased by 12.2%, the lowest levels since November 2022, according to the Census Bureau of the Commerce Department.
  • While the sales pace of October was revised lower to 672,000 units from previously reported 679,000 units, housing sales saw an increase in the Northeast and the Midwest but a decrease in the South and the West.
  • The available inventory of pre-owned homes currently falls significantly short of the almost 2 million units that were available pre-pandemic, per the National Association of Realtors.
  • According to Freddie Mac, the rate on the 30-year fixed-rate mortgage fell to 6.67%, the lowest since June, potentially indicating a boost in home sales next year.
  • The median new housing price stood at $434,700 in November, a 6.0% drop from the same time last year.

Dissection of New Home Sales Data

The Census Bureau of the Commerce Department announced on Friday that new home sales went down by 12.2% last month, reaching a seasonally adjusted annual rate of 590,000 units. This is the lowest level since November 2022. Furthermore, the sales pace for October was even revised to 672,000 units, down from the initially reported 679,000 units.

Sales data illustrated an increase in the Northeast and Midwest regions while sales in the South and West — densely populated regions — displayed a downward trend.

Analysis of Existing Home Market and Mortgage Rates

The quantity of available houses that were previously owned is still considerably below the near 2 million units we saw prior to the COVID-19 pandemic. This information was highlighted by the National Association of Realtors, which also reported a slight increase in home resales in November.

Freddie Mac data indicates that the rate on the popular 30-year fixed-rate mortgage was down to 6.67% this week, its lowest since June and down from 6.95% the previous week. This drop, from a 23-year high of 7.79% at the end of October, is mirroring the decrease in U.S. Treasury yields. This trend should stimulate home sales in the coming year.

Insights into Housing Prices

The median price for a new house in November was recorded at $434,700, a 6.0% decline from a year earlier as builders are reducing prices to attract buyers. Despite this, house prices are probably not declining dramatically as other indicators are showing strong gains.

The majority of houses sold last month were priced between $300,000 to $749,000. As of the end of November, there were 451,000 new homes available in the market, an increase from 440,000 in October. At the current sales pace, 9.2 months would be needed to clear the inventory of houses on the market, up from 7.9 months in October.

The fluctuations in the housing market can greatly affect the forex or trading markets. Changes in housing sales and prices alter the currency’s valuation, which can impact traders holding positions in related assets.

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