Purchases of new U.S. homes exceeded projections in November, holding near a five-year high and showing the housing recovery was gaining momentum even as mortgage rates climbed.
Sales declined 2.1 percent to a 464,000 annualized pace, following a revised 474,000 rate in October that was the strongest since July 2008, figures from the Commerce Department showed today in Washington. The median forecast of 75 economists surveyed by Bloomberg called for 440,000.
Home purchases are strengthening as builders respond to pent-up demand unleashed by employment gains and record-high stock prices. Applications for building permits held near a five-year high in October, signaling a pickup in new-home construction will be maintained through the start of 2014.
“You did have a rise in mortgage rates, but house prices are still about 20 percent below the peak, affordability is high, and the labor market is improving,” said Gennadiy Goldberg, an economist at TD Securities USA LLC in New York. “There’s a natural demand for more housing.”
Economists’ estimates in the Bloomberg survey ranged from 390,000 to 475,000. October sales were originally reported as a 444,000 pace. The Commerce Department revised up data for each month back to August.
The market is on pace to reach 435,100 new homes sold this year, the most since 2008, according to Bloomberg calculations.
Another report today showed orders for durable goods climbed more than forecast in November, reflecting broad-based gains that signal business investment is rebounding after a third-quarter lull.
Bookings (DGNOCHNG) for goods meant to last at least three years rose 3.5 percent after a 0.7 percent drop the prior month, according to Commerce Department data. The median estimate of 75 economists surveyed by Bloomberg called for a 2 percent advance. Excluding demand for transportation equipment, which is often volatile, orders also beat projections.
Stocks rose after the reports, with the Standard & Poor’s 500 Index climbing 0.1 percent to 1,830.14 at 10:11 a.m. in New York.
The median sales price for a new home climbed 10.6 percent from November 2012 to $270,900, today’s report on sales showed.
Purchases cooled in two of four U.S. regions in November, led by a 26.6 percent drop in the Midwest. Sales jumped 31.1 percent in the West and 15.2 in the Northeast.
The supply of homes dropped to 4.3 months, the lowest since June, from 4.5 months in October. There were 167,000 new houses on the market at the end of November, down from 179,000 the prior month.
New-home sales, tabulated when contracts are signed, are considered a timelier barometer than purchases of previously owned dwellings, which are calculated when a contract closes. New construction accounted for about 7 percent of the residential market in 2012.
Building permits fell 3.1 percent in November from the prior month to a 1.01 million rate, Commerce Department data showed last week. October’s 1.04 million level was the highest since June 2008.
At the same time, sales of previously owned homes declined for the third consecutive month in November to the lowest level of the year as rising mortgage rates and a limited supply of properties discouraged buyers.
Purchases dropped 4.3 percent to a 4.9 million annual rate, the National Association of Realtors reported last week. The median forecast of economists in a Bloomberg survey called for the pace to slow to 5.02 million. Still, the group projects 2013 will be the best year for the industry in seven years, with an estimated 5.1 million properties sold.
The average rate on a 30-year mortgage was 4.47 percent in the week ended Dec. 19, according to McLean, Virginia-based Freddie Mac. The rate reached a record low of 3.31 percent a year ago and was at 3.35 percent as recently as May.
Homebuilders such as Los Angeles-based KB Home (KBH:US) see the rise in interest rates as a short-term “pause” for buyer demand that won’t crimp an acceleration in the housing recovery next year.
“Higher mortgage rates, higher home prices and lower consumer confidence due to uncertainty in Washington triggered a pause among homebuyers who are now being more cautious,” Chief Executive Officer Jeffrey Mezger said on a Dec. 19 earnings call. “Affordability is at attractive levels, demographics remain strong and there’s pent-up demand due to delayed household formation” that will support the market in 2014.
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