New-home sales rose to their highest level in more than six years in December, finishing the year on a strong note and suggesting renewed momentum for the sector.
Sales of newly built, single-family homes increased 11.6% from a month earlier to a seasonally adjusted annual rate of 481,000, the Commerce Department said Tuesday, the best showing since June 2008. Economists surveyed by The Wall Street Journal had expected sales to reach a pace of 450,000.
Adding to the brighter picture, figures for October and November were revised up by a combined 11,000.
New-home sales represent about one-tenth of the overall housing market, and monthly figures are frequently revised. December’s advance came with a margin of error of 16.5 percentage points. So it will take time to see if a new trend is in fact emerging.
“On the whole, the combination of lower mortgage rates and solid labor market activity appear to have ignited a meaningful pick-up in sales activity,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities, said in a note to clients.
December was warmer than usual across the continental U.S., possibly contributing to the uptick. But mortgage rates have been heading lower, employers are adding jobs at the fastest clip since before the recession and consumers appear confident, factors which may continue to support the sector.
Rob Bowman, president of closely held Charter Homes & Neighborhoods in Lancaster, Pa., said he feels “a little more encouraged” after sales picked up in December relative to a year earlier. Charter sold roughly 260 homes in central Pennsylvania last year, and it anticipates selling more than 300 this year.
“After a bumpy 2014, we've actually been pleasantly surprised since the middle of December,” Mr. Bowman said. “Regardless of the weather or the holidays, people purchased. And we’re starting to see people buy in the sub-$200,000 price point. We haven’t seen that in 15 months.”
Mr. Bowman couldn't attribute the increase to a specific factor, though he noted that the general improvement in the economy and historically low interest rates likely contributed.
A 30-year fixed-rate mortgage averaged 3.63% for the week ending Jan. 22, down slightly from the prior week and well below the average 4.39% a year earlier, Freddie Mac said last week.
Results from larger builders in recent months have been inconsistent.
D.R. Horton Inc., the largest U.S. builder by closings, on Monday reported a 35% increase in sales contracts to 7,370 homes in its fiscal first quarter ended Dec. 31 from a year earlier, and its sales pace in January so far has accelerated.
Anticipating a strong spring selling season, D.R. Horton ended December with 1,000 more speculative homes on hand than at the same time last year.
D.R. Horton Chief Executive David Auld attributed the builder’s optimism for 2015 to better weather this winter than last; more buyer confidence due to federal pledges to ease mortgage-qualification standards; and lower gas prices. “The gasoline price is huge,” he said during a conference call with investors on Monday. “That’s money back into the economy every week.”
But other builders posted mediocre gains; Ryan Homes parent NVR Inc. on Monday registered a 3% gain in contracts to 2,713 homes.
Underscoring persistent weakness in the housing market, sales of existing homes, which account for roughly 90% of all purchases in the U.S., totaled 4.93 million last year, down 3.1% from 2013, according to a National Association of Realtors report released last week. News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.
Separately, groundbreakings for single-family homes last month rose the highest level since March 2008, though they remained weak by historical standards, a Commerce Department report said last week.
Tuesday’s data also showed housing inventories fell slightly. At December’s pace, it would take 5½ months to exhaust the supply of newly built homes on the market.
The median price of a newly built home stood at $298,100 in December, up from $275,500 a year earlier.
Adding to the brighter picture, figures for October and November were revised up by a combined 11,000.
New-home sales represent about one-tenth of the overall housing market, and monthly figures are frequently revised. December’s advance came with a margin of error of 16.5 percentage points. So it will take time to see if a new trend is in fact emerging.
“On the whole, the combination of lower mortgage rates and solid labor market activity appear to have ignited a meaningful pick-up in sales activity,” Millan Mulraine, deputy head of U.S. research and strategy at TD Securities, said in a note to clients.
December was warmer than usual across the continental U.S., possibly contributing to the uptick. But mortgage rates have been heading lower, employers are adding jobs at the fastest clip since before the recession and consumers appear confident, factors which may continue to support the sector.
Rob Bowman, president of closely held Charter Homes & Neighborhoods in Lancaster, Pa., said he feels “a little more encouraged” after sales picked up in December relative to a year earlier. Charter sold roughly 260 homes in central Pennsylvania last year, and it anticipates selling more than 300 this year.
“After a bumpy 2014, we've actually been pleasantly surprised since the middle of December,” Mr. Bowman said. “Regardless of the weather or the holidays, people purchased. And we’re starting to see people buy in the sub-$200,000 price point. We haven’t seen that in 15 months.”
Mr. Bowman couldn't attribute the increase to a specific factor, though he noted that the general improvement in the economy and historically low interest rates likely contributed.
A 30-year fixed-rate mortgage averaged 3.63% for the week ending Jan. 22, down slightly from the prior week and well below the average 4.39% a year earlier, Freddie Mac said last week.
Results from larger builders in recent months have been inconsistent.
D.R. Horton Inc., the largest U.S. builder by closings, on Monday reported a 35% increase in sales contracts to 7,370 homes in its fiscal first quarter ended Dec. 31 from a year earlier, and its sales pace in January so far has accelerated.
Anticipating a strong spring selling season, D.R. Horton ended December with 1,000 more speculative homes on hand than at the same time last year.
D.R. Horton Chief Executive David Auld attributed the builder’s optimism for 2015 to better weather this winter than last; more buyer confidence due to federal pledges to ease mortgage-qualification standards; and lower gas prices. “The gasoline price is huge,” he said during a conference call with investors on Monday. “That’s money back into the economy every week.”
But other builders posted mediocre gains; Ryan Homes parent NVR Inc. on Monday registered a 3% gain in contracts to 2,713 homes.
Underscoring persistent weakness in the housing market, sales of existing homes, which account for roughly 90% of all purchases in the U.S., totaled 4.93 million last year, down 3.1% from 2013, according to a National Association of Realtors report released last week. News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.
Separately, groundbreakings for single-family homes last month rose the highest level since March 2008, though they remained weak by historical standards, a Commerce Department report said last week.
Tuesday’s data also showed housing inventories fell slightly. At December’s pace, it would take 5½ months to exhaust the supply of newly built homes on the market.
The median price of a newly built home stood at $298,100 in December, up from $275,500 a year earlier.