New home sales plunged in November

New home sales in the US dropped in November as mortgage rates have retreated from their highest levels this year.

New home sales in the US dropped in November as mortgage rates slowly retreated from their highest levels this year. Sales of newly constructed homes dropped 12.2% in November to a seasonally adjusted annual rate of 590,000 from a revised rate of 672,000 in October, according to a joint report from the US Department of Housing and Urban Development and the Census Bureau. Sales were up just 1.4% from a year ago. This was well below analysts’ expectations of an annualized sales pace of 685,000 and the steepest decline since April 2022. The sales pace for new homes hasn’t been this low since November 2022 when rates were rising. Affordability challenges, particularly with high mortgage rates, likely kept buyers on the sidelines. Typical mortgage rates reached their highest levels in 23 years – hitting 7.79% for a 30-year, fixed-rate loan – and have been coming down since. Newly constructed homes have been a welcome alternative for buyers struggling with a dearth of supply in the existing home market. Sales of existing homes are on pace to be at among the lowest levels in 30 years. These have been trending down since February, except for a surprising uptick in November. “Homebuilders are on pace to have one of their most successful years, with total new home sales this year expected to end up nearly 10% higher than last year,” said Lisa Sturtevant, chief economist of Bright Multiple Listing Service, which serves six states on the Atlantic seaboard and Washington, DC. “By contrast, sales of existing homes are down by nearly 20% year-over-year.”