New-home sales drop from month, year earlier in December

Sales of new single-family homes fell in December from levels recorded the month and year before, the Commerce Department reports - a statistic that goes against the recent trend of positive residential sales data.

Sales of new single-family homes fell in December from levels recorded the month and year before, the Commerce Department reports - a statistic that goes against the recent trend of positive residential sales data.

According to the government report, the seasonally adjusted annual rate of new home sales during the final month of 2011 reached a rate of 307,000 - more than 2 percent lower than November's pace and more than 7 percent behind the rate from December 2010.

A Reuters poll of economists prior to the report coming out indicated the projected rate of sales was 320,000.

While the median sales price of new single-family residences slipped from $215,700 in November to $210,300 in December, the average sales price increased by nearly $16,000 between the months, reaching $266,000.

A housing analyst told Bloomberg that the recent growth in home sales is due to a variety of economic improvements throughout the country.

"We've had a clear turn toward positive momentum in the housing market," Aaron Smith, senior economist at Moody's Analytics, told the news source. "Lower unemployment and higher confidence, coupled with record low mortgage rates, are coalescing to spur increased buying."

In a statement before the Commerce Department's report was released, the Federal Reserve noted housing market activity remains stagnant due to the still-high jobless rate in many parts of the country.

"While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated," the Fed stated. "Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed."

Sales of new properties were split in the four regions of the country, the report found. In the Northeast and West, new single-family home sales grew 46.7 and 9 percent, respectively, from the month before. Conversely, sales in the South and Midwest declined 10.1 and 3.7 percent, respectively.

One factor likely helping many buyers finalize home sales in the past few months is low mortgage rates. However, the latest mortgage records from Freddie Mac show they might finally be trending upward.

The government-sponsored enterprise's latest mortgage report shows rates for 30- and 15-year fixed-rate home loans rose considerably during the week ending January 26. The average long-term rate climbed to 3.98 percent, the report showed, while a short-term rate averaged 3.24 percent.



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