US new home sales unexpectedly fell in December, although the previous month’s data were revised sharply upwards to the highest in more than two years.
Sales of single-family houses declined 7.3 per cent to a seasonally adjusted annual rate of 369,000 last month, the census bureau said. This followed a 398,000 rate in November that was greater than the 377,000 initially reported.
Economists surveyed by Bloomberg had expected a level of 388,000.
“The December number is a bit of a mystery; we thought there was a good chance the much milder-than-usual weather would have helped lift sales, as we saw last winter,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
In spite of the last month’s drop, 367,000 new homes were bought in 2012, the most since 2009 and the first annual gain in seven years – a sign that the housing market is making a turnround from its nadir.
Americans have felt more confident against a backdrop of slow but steady job gains and rising home prices. Record-low mortgage interest rates have also spurred sales.
The median price of a new home increased 13.9 per cent last month from a year ago, climbing to $248,900.
The data measure the number of newly constructed homes with a committed sale during the month. These figures are considered a more timely barometer than those on the purchase of previously owned homes, which are calculated only once a deal closes.
Although newly constructed homes account for a little more than 7 per cent of the residential market – down from a 15 per cent high at the housing market’s peak – economists say sales of these properties are a good indicator of housing market trends, economic momentum and consumer purchases of furniture and appliances.
Homebuilders have boosted new home construction to meet renewed demand. Construction of new properties jumped last month to a 954,000 annual rate, the fastest pace since June 2008, according to last week’s commerce department figures.
The supply of new homes rose to 4.9 months in December at the current sales pace – the highest level since April – from 4.5 months the month prior.
While the number of new houses on the market rose to 151,000 last month from 149,000 in November, inventories of previously owned homes declined to 1.82m, the fewest since January 2001, according to National Association of Realtors data earlier this week.
In spite of the nascent optimism about the US housing market, some economists remain cautious. Millan Mulraine of TD Securities noted that the supply of new homes on the market had increased for the fourth consecutive month in December, with the inventory level now at a one-year high.
“While this is still close to multi-decades low, it must be seen in the context of demand, which is yet to move much beyond current cycle lows,” he said.
“The worry, though, is that with the pace of new residential building activity now approaching 1m units, the impending surge in new homes supply could create a problem for this segment of the housing market, unless there is a . . . increase in demand,” he added.
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