WASHINGTON- Sales of new US single-family homes fell unexpectedly in December, likely held down by a shortage of more affordable homes, but lower mortgage rates supported the overall housing market.
The US Commerce Department report on Monday also showed downward revisions to sales for the prior three months, bucking a recent streak of fairly strong housing data. Strength in housing, following a slump in 2018 through the first half of 2019, could offset some of the drag on economic growth from weakness in business spending and manufacturing.
New home sales slipped 0.4 percent last month to a seasonally adjusted annual rate of 694,000 units, with sales in the South dropping to the lowest in more than a year. It was the third straight monthly decline in sales. November’s sales pace was revised down to 697,000 units from the previously reported 719,000. September and October sales were also marked down.
“Low mortgage rates, a robust labor market and stabilizing geopolitical tensions suggest that demand for housing will stick around, and buyers are hungry for more housing options,” said Matthew Speakman, economist at online real estate firm Zillow.
Sales last month were concentrated in the $200,000-$749,000 price range. New homes priced below $200,000, the most sought after, accounted for only 10 percent of sales.
Economists polled by Reuters had forecast new home sales, which account for about 11.1 percent of housing market sales, would increase 1.5 percent to a pace of 730,000 units in December.
The PHLX housing index fell, tracking a broadly weaker US stock market as investors worried about the economic fallout of the fast-spreading coronavirus outbreak in China that has prompted the country to extend the Lunar New Year holidays and businesses to close some operations. The dollar was steady against a basket of currencies. US Treasury prices rallied.
New home sales are drawn from permits and tend to be volatile on a month-to-month basis. Sales jumped 23.0 percent from a year ago. For all of 2019, new home sales increased 10.3 percent to 681,000 units, the highest since 2007. – Reuters
