A buying spree in the Midwest spurred new U.S. home sales in November to the fastest pace since July.
The Commerce Department said Dec. 23 that new-home sales in November rose 5.2 percent to a seasonally adjusted annual rate 592,000. It was the fastest pace since July’s 622,000. Sales were up 16.5 percent from November 2015.
Sales in the Midwest shot up 43.8 percent, the region’s biggest monthly increase since October 2012. Sales were up 7.7 percent in the West, flat in the Northeast and down 3.1 percent in the South.
The median price of new home sold last month was $305,400.
Demand for houses has been strong this year, helped by a healthy job market and low mortgage rates. The unemployment rate is at a nine-year low 4.6 percent, and most workers enjoy job security.
The National Association of Realtors said Dec. 21 that Americans bought existing homes last month at the fastest pace since February 2007.
But the cheap loans that have supported stronger sales may be vanishing. Long-term mortgage rates have quickly risen since the election. The average 30-year, fixed-rate mortgage rose to 4.30 percent this week, the highest level since April 2014.
Investors have bid rates higher because they believe President-elect Donald Trump’s plans for tax cuts and higher infrastructure spending will drive up economic growth and inflation. And last week, the Federal Reserve, citing improvement in the U.S. economy, raised short-term U.S. interest rates for only the second time in a decade.
More people are at risk of being priced out of the housing market because rates are rising at a time when there is a shortage of properties for sale, driving bids higher.
“Housing demand clearly continues to be strong,” Stephen Stanley, chief economist at Amherst Pierpoint Securities, said in a research note. But he noted that the November sales numbers mostly came in before the sharp rise in rates: “Higher mortgage rates could produce renewed caution heading into next year.”