Sales of new homes slip 2.1 percent

WASHINGTON — New-home sales dipped in November, but the government released more positive figures for the previous three months, a sign that housing may be regaining strength after a summer lull.

Sales slipped 2.1 percent last month to a seasonally adjusted annual rate of 464,000, the Commerce Department said Tuesday. The slight drop occurred after sales had surged to a rate of 474,000 in October. That was the fastest pace since 2008 and was 17.6 percent above the September level — the biggest one-month jump in 21 years.

The annual pace of new-home sales remains well below the 700,000 generally consistent with a healthy market. But economists are encouraged by a pickup in sales after a slowdown likely caused by higher mortgage rates.

Mortgage rates had spiked amid investor concerns about how fast the Federal Reserve would remove its support for the economy.

The government’s report Tuesday revised up new-home sales for the three months preceding November. August’s total was revised up by 9,000, September’s by 49,000 and October’s by 30,000.

“The rebound in sales following the sharp slowdown in July was much stronger than originally reported,” said Michael Gapen, an economist at Barclays.

Mark Vitner, senior economist at Well Fargo, said, “The housing recovery remains well in place.”

He noted that mortgage rates are still low by historic standards and should support sales next year. Vitner predicted that new-home sales would rise next year to an annual pace of around 530,000.

In a separate report, the Mortgage Bankers Association said the number of Americans applying for mortgages fell 6.3 percent last week from the previous week. Applications have reached a 13-year low, down 63 percent from their May peak.

Much of the decline reflects a drop-off in refinancings as rates have risen. The average for the 30-year mortgage was 4.47 percent last week, up nearly a full percentage point from last spring.

In November, sales of new homes dropped 26.6 percent in the Midwest and 9.1 percent in the South. Sales rose 31.1 percent in the West and 15.2 percent in the Northeast.

The median price of a new home sold in November rose to $270,900, up 10.6 percent from a year ago.

There were 167,000 new homes on the market at the end of November, a drop of 6.7 percent from the October inventory. That would translate into a tight supply of 4.3 months at the November sales pace.

Mortgage rates began rising in May after the Fed first signaled that it might slow its $85 billion in monthly bond purchases. But rates have declined a bit after peaking at 4.6 percent in August.

The National Association of Realtors said last week that the number of people who bought existing homes in November fell for a third straight month. The lingering effects of the partial government shutdown in October might have deterred some sales.

Still, the government said builders broke ground on homes at a seasonally adjusted annual rate of 1.09 million homes and apartments in November. That was the fastest pace since February 2008 and was 23 percent higher than in October.

The Fed announced last week that it will begin in January its long-anticipated move to trim its monthly bond purchases. The Fed said it would cut the $85 billion in purchases it has been making by a modest $10 billion. It indicated that further cuts would take place in coming months if the economy keeps improving.

Long-term rates could head up after the Fed pulls back on its bond buying.

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