WASHINGTON - Sales of new homes slipped slightly in November after a big surge the previous month. The figures add to evidence that the housing market is struggling to sustain the pace of its recovery.
Sales dipped 2.1 percent in November to a seasonally adjusted annual rate of 464,000, the Commerce Department said Tuesday. In October, new home sales had shot up 17.6 percent, the biggest monthly gain in more than two decades. October’s annual sales pace of 474,000 was the highest since July 2008.
The annual pace of new home sales remains well below the 700,000 generally consistent with a healthy market.
Before the rebound in October, home sales had slowed over the summer. They did so after mortgage rates spiked amid investor concerns about how fast the Federal Reserve would remove its support for the economy.
Still, analysts noted that the slight drop in November sales occurred after a surge in October, with some signs suggesting further gains.
“The housing recovery remains well in place,” said Mark Vitner, senior economist at Wells Fargo.
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 about 530,000.
“You did have a rise in mortgage rates, but house prices are still about 20 percent below the peak, affordability is high, and the labor market is improving,” said Gennadiy Goldberg, an economist at TD Securities USA LLC in New York. “There’s a natural demand for more housing.”
Economists’ estimates of November new-home sales in a Bloomberg survey ranged from 390,000 to 475,000. October sales were originally reported at a 444,000 pace. The Commerce Department revised up data for each month back to August.
The market is on pace to reach 435,100 new homes sold this year, the most since 2008, according to Bloomberg calculations.
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 previously owned 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 $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.
Information for this article was contributed by Martin Crutsinger of The Associated Press and Michelle Jamrisko of Bloomberg News.
Business, Pages 27 on 12/25/2013