WASHINGTON (Reuters) - Sales of new U.S. single-family homes dropped to a one-year low in November, but the unexpected decline is probably temporary amid a chronic shortage of previously owned homes, which has been supporting demand for new construction.
New home sales decreased 12.2% to a seasonally adjusted annual rate of 590,000 units last month, the lowest level since November 2022, the Commerce Department's Census Bureau said on Friday. October's sales pace was revised lower to 672,000 units from the previously reported 679,000 units.
Economists polled by Reuters had forecast new home sales, which account for 13.4% of U.S. home sales, rebounding to a rate of 685,000 units. New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis. Sales increased 1.4% on a year-on-year basis in November.
Monthly sales rose in the Northeast and the Midwest. They tumbled in the densely populated South and the West.
The supply of previously owned houses on the market remains well below the nearly 2 million units before the COVID-19 pandemic, according to the National Association of Realtors, which this week reported a modest rise in home resales in November.
The rate on the popular 30-year fixed-rate mortgage averaged 6.67% this week, the lowest level since June and down from 6.95% in the prior week, according to data from mortgage finance agency Freddie Mac. It has tumbled from a 23-year high of 7.79% in late October, tracking the decline in U.S. Treasury yields. That should help to stimulate home sales next year.
The median new house price in November was $434,700, a 6.0% decline from a year ago as builders lower prices to woo buyers. But house prices are probably not falling by that much, with other measures showing strong gains.
The bulk of the houses sold last month were in the $300,000 to $749,000 price range. There were 451,000 new homes on the market at the end of November, up from 440,000 in October. At November's sales pace it would take 9.2 months to clear the supply of houses on the market, up from 7.9 months in October.