US new-home sales tumble in December

WASHINGTON — Americans pulled back sharply from buying new homes in December, but sales for all of 2016 were the highest since 2007.

The Commerce Department said Thursday that new-home sales last month fell 10.4 percent to a seasonally adjusted annual rate 536,000. But sales totaled 563,000 in 2016, up 12.2 percent over the past year.

Much of the sales growth during 2016 came from low mortgage rates and a steadily improving job market. But 2017 begins with some of that momentum possibly stalling as mortgage rates have risen since the November presidential election, worsening affordability and potentially curbing sales growth as more buyers cope with affordability issues.

"Sales suffered in December as a jump in mortgage rates clearly had a chilling effect on activity," said Joshua Shapiro, chief U.S. economist at the consultancy MFR. Still, Shapiro expects that the healthy jobs market will support continued home sales.

In the wake of Donald Trump's presidential victory, financial markets are expecting faster economic growth from tax cuts and rising levels of inflation. Interest rates for both the 10-year Treasury note and mortgages have swung higher as a result.

Mortgage buyer Freddie Mac said on Thursday that the rate on 30-year fixed-rate loans averaged 4.19 percent. That was dramatically higher than a 30-year rate that averaged 3.65 percent for all of 2016, the lowest level recorded from records going back to 1971.

The low rates and a shortage of inventory have also boosted prices.

The median sales price for a new home in December was $322,500, a 7.8 percent increase over the past year that easily outpaced average wage growth.

New-home purchases fell in the Midwest, South and West last month and increased in the Northeast. Sales of new homes can be volatile on a monthly basis.

As rates rise, there are other signs that would-be buyers are holding off.

The National Association of Realtors said Tuesday that sales of existing homes fell 2.8 percent last month to a seasonally adjusted annual rate of 5.49 million.

Related News

Poll: GOP health bill a far cry from Trump promises

May 31, 2017

Kaiser poll: Only 8 percent say the Senate should pass the House GOP health care bill as is

The Latest: South Korea conducts live-fire naval drills

Sep 5, 2017

South Korea's navy conducted a live-fire exercise at sea as Seoul displays its military capabilities following North Korea's latest nuclear test

The Latest: Work resumes on raising sunken SKorean ferry

Mar 23, 2017

South Korean officials say salvage crews have resumed raising a 6,800-ton ferry Sewol off the country's southwestern coast

You may also like these

Poll: GOP health bill a far cry from Trump promises

May 31, 2017

Kaiser poll: Only 8 percent say the Senate should pass the House GOP health care bill as is

The Latest: South Korea conducts live-fire naval drills

Sep 5, 2017

South Korea's navy conducted a live-fire exercise at sea as Seoul displays its military capabilities following North Korea's latest nuclear test

The Latest: Work resumes on raising sunken SKorean ferry

Mar 23, 2017

South Korean officials say salvage crews have resumed raising a 6,800-ton ferry Sewol off the country's southwestern coast

Search
Financial Markets

About Us

Deck Biz is an intelligent platform providing international and regional business news updates. You won’t get these insights elsewhere other than Deck Biz.

Contact us: sales@deckbiz.com