WASHINGTON -- Sales of new U.S. houses soared in November, defying higher mortgage rates. But they're still below year-ago levels.
After holding steady for a month during the federal government shutdown, fixed mortgage rates cautiously crept up this week.
The Commerce Department said Thursday that new house sales jumped 16.9 percent in November from the previous month to a seasonally adjusted annual rate of 657,000.
Sales doubled in the Northeast, rose 31 percent in the Midwest and jumped 21 percent in the South. Transactions in the West declined 5.9 percent.
The report was delayed by the 35-day government shutdown. Despite the healthy gain, sales remained 7.7 percent below the pace from a year ago.
The housing market stumbled badly at the end of the year as mortgage rates reached a seven-year high near 5 percent. Sales of existing houses plunged in December and were 3.1 percent lower in 2018 than the previous year.
The median sales price fell 11.9 percent from a year earlier, the most in almost a decade, to a nearly two-year low of $302,400.
New-house purchases are seen as a timelier indicator of the market as they're tabulated when contracts are signed. They account for about 10 percent of the market, with the rest comprising previously-owned houses, calculated when contracts close.
The number of properties sold for which construction hadn't yet started rose to a one-year high of 238,000.
The figures contrast with other data showing the housing market is cooling amid gradually rising borrowing costs and a scarcity of available properties. However, steady job gains and elevated consumer confidence, along with the continued boost from fiscal stimulus such as tax cuts, are helping underpin some demand. The Labor Department is set to release its monthly jobs report today.
In a separate report, U.S. house sellers in 2018 had the biggest gains in 12 years as they benefited from longer tenure in their properties.
Sellers in 2018 had an average realized gain of $61,000, up from $50,000 in 2017 and $39,500 in 2016. Homeowners who sold in the last quarter had stayed in their properties an average of 8.3 years, longer than they have in at least 19 years and the longest since Attom Data Solutions started tracking the statistic in 2000.
While the $61,000 gain is a nationwide average, "those along the coasts reaped the most gains," said Todd Teta, chief product officer at Attom.
Gains in California outpaced other areas by a wide margin. Nine of the 10 metropolitan areas with the largest gains are in California, with the average increase in the San Jose-Sunnyvale-Santa Clara area at close to $600,000 or about 10 times the median household income in the United States.
Home sellers lost money in a dozen metropolitan areas last year. The biggest average loss, of $26,000, was in Montgomery, Ala. The last year Montgomery sellers sold for an average gain was in 2009.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average mortgage rate inched up to 4.46 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) The rate was 4.45 percent a week ago and 4.22 percent a year ago.
The 15-year fixed-rate average ticked up to 3.89 percent with an average 0.4 point. It was 3.88 percent a week ago and 3.68 percent a year ago. The five-year adjustable-rate average jumped to 3.96 percent with an average 0.3 point. It was 3.90 percent a week ago and 3.53 percent a year ago.
"Rates jumped around somewhat over the past week, dipping after soft housing and consumer confidence data, and climbing after a strong private payrolls report," said Aaron Terrazas, a senior economist at Zillow. "But bigger moves are on the horizon. As often occurs when [Federal Reserve] statements catch markets off guard, bond yields fell after the [Federal Reserve] announced its inclination to pause future rate hikes. Mortgage rates seem certain to follow in step. The next major data event on the horizon is [today's] jobs report and, after weeks of relative calm, markets are poised for increased volatility."
As expected, the Federal Reserve did not raise its benchmark rate at its meeting this week. Instead, the central bank signaled that it is in no rush to do so. That was enough to cause the stock market to surge and long-term bond yields to slip, but too late in the week to be factored into Freddie Mac's survey. The government-supported mortgage backer aggregates rates weekly from 125 lenders nationwide to come up with national average mortgage rates.
The Fed doesn't set mortgage rates, but its decisions influence them. The central bank changed its description of the U.S. economy to "solid" from "strong," a slight downgrade. The Fed's cautiousness coupled with pending home sales dropping to their lowest point in five years and home prices rising at a slower pace could keep rates in check.
Information for this article was contributed by Christopher Rugaber of The Associated Press, by Katia Dmitrieva and Alex Tanzi of Bloomberg News and by Kathy Orton of The Washington Post.
Business on 02/01/2019