(Bloomberg) — New U.S. home sales rose to a nine-month high in December, indicating strong demand toward the end of 2021 despite higher prices and still limited inventory.
Government data showed on Wednesday that buying rose 11.9% from a month earlier, to an annualized pace of 811,000. The average estimate in a Bloomberg survey of economists called for the 760,000 rate, and the December level exceeded all but one forecast.
An increase in the number of completed homes over the past two months and the prospect of higher interest rates this year as the Federal Reserve tightens monetary policy could encourage a pickup in contract signing.
While potential buyers are still looking for investment properties with more space, prices remain high and builders are facing some material constraints and labor constraints.
Still, a separate report by the Conference Board on Tuesday showed that home-buying plans have hit record highs in the next six months.
The new-home sales report produced by the Census Bureau and the Department of Housing and Urban Development showed that the average selling price of a new home climbed 3.4% from a year earlier to $377,700.
For the full year, sales declined to 762,000 from 822,000 in 2020, the report showed.
At the end of December, there were 403,000 new homes for sale, which is slightly more than a month ago. At current sales pace, it would take 6 months for new homes to run out, compared to 3.8 months a year ago.
Of the homes sold last month, construction was yet to begin on 231,000, the highest since May. Already completed homes hit a three-month high of 187,000. The number of properties sold and currently under construction reached an 11-month high in December.
Sales grew in all regions but in the Northeast. Buying in the West was the strongest since January last year, while sales in the South hit an eight-month high.
Separate data from last week showed that current home sales, which make up 90% of home purchases, in December were driven by limited inventory for the first time in four months.
New-home purchases account for about 10% of the market and are calculated when contracts are signed. Data on new homes are volatile; The report showed 90% confidence that the change in sales ranged from a decline of 8.4% to an increase of 32.2%.
—With assistance from Reade Pickert and Christy Schuble.
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