The Commerce Department said that sales of newly built homes in the U.S. increased 1.3 percent in November from the prior month. As a lagging indicator of real estate market demand, new home sales are monitored carefully by investors.
New single-family houses sold at a seasonally adjusted annual rate of 719,000 last month, the Commerce Department said Monday (pdf). This represents a growth of 9.8 percent so far this year.
The Department said that the figures show a 1.3 percent growth above the revised October rate of 710,000 and 16.9 percent above the November 2018 estimate of 615,000. Revisions to new single-family houses sold estimates happen mostly because imputed data is replaced with reported data in subsequent months. Many homes have a sales contract signed before a permit is issued and an estimate is made for these sales ahead of permit authorization.
Median Sales Price
The Commerce Department said the median sales price of new houses sold in November 2019 was $330,800, which is up 7.3 percent from a year ago. The average sales price was $388,200.
The increase reflects a steady decline in mortgage rates, which has made borrowing cheaper and brought more people seeking to upgrade their house into the market.
The typical 30-year mortgage rate has fallen from roughly 4.9 percent a year ago to 3.8 percent this November.
Strong Job Market, Consumer Spending Boost US Economy
The U.S. economy is finishing the year in stronger shape, in part because of resilient consumers and a healthy job market.
The Commerce Department said Dec. 20 that the total output of goods and services, or the gross domestic product (GDP), expanded at an annual rate of 2.1 percent in the July–September quarter.
With near-record low unemployment and solid wage growth, the U.S. labor market is expected to continue to underpin consumer spending and the economy.
“The economy is still solid,” said Diane Swonk, chief economist at Grant Thornton. “What this economy has lacked in momentum, it has made up for in stamina, and the Fed gave it a shot of adrenaline this year with three rate cuts.”
The Federal Open Market Committee, which determines interest rates, said after its most recent meeting on Dec. 11 that a healthy labor market contributed to its decision to keep the federal funds rate unchanged, within a target range of 1.5 percent to 1.75 percent.
“The labor market remains strong and that economic activity has been rising at a moderate rate,” the committee said. “Job gains have been solid, on average, in recent months, and the unemployment rate has remained low.”
The Federal Reserve is conducting a review of its monetary policy tools, due for completion next year.
“First, as this expansion continues into its 11th year—the longest in U.S. history—economic conditions are generally good,” Federal Reserve Chairman Jerome Powell said in November. “Second, the benefits of the long expansion are only now reaching many communities, and there is plenty of room to build on the impressive gains achieved so far.”
“Recent years’ data paint a hopeful picture of more people in their prime years in the workforce and wages rising for low and middle-income workers,” Powell added.
The latest employment figures released Dec. 6, show that nonfarm payroll employment rose by 266,000 in November, and the unemployment rate stood at 3.5 percent.
“Notable job gains occurred in health care and in professional and technical services,” said William W. Beach, commissioner of the Bureau of Labor Statistics.
Figures show that in January 2019, the unemployment rate among men 20 years old and up was 3.7 percent, while the jobless rate for women in the same age bracket was 3.6 percent. In November, the unemployment rate for both combined fell to 3.2 percent.
By comparison, joblessness among the cohort of 16- to 19-year-olds ticked down to 12 percent in November, compared to 12.9 percent in January. Peak unemployment for this group in the past two decades hit 27.2 percent in October 2009.
Joblessness among blacks or African Americans reached historic lows in 2019, falling to 5.5 percent in November from 6.8 percent in January.
Strong Consumer Spending
A Labor Department report showed that consumer spending grew by a solid 0.4 percent rate in November, the strongest gain since July, and incomes rebounded after a weak reading in October.
Personal income increased $101.7 billion (0.5 percent) and disposable personal income (DPI) increased $87.7 billion (0.5 percent) in November, according to estimates released on Dec. 20 by the Bureau of Economic Analysis.
The brisk pace of spending in November is a reassuring sign that consumers, who account for about 70 percent of economic activity, are helping buoy the economy amid international trade tensions.
Many economists are forecasting that the U.S. economy is expanding at a respectable 2 percent annual rate in the final quarter of the year.
Reuters and The Associated Press contributed to this report.