Sales of new American detached houses increased to an 11-month high in February, and January sales were revised higher, suggesting lower mortgage rates began to lift the striking housing market.
The Ministry of Commerce said on Friday, new home sales increased by 4.9 per cent to a seasonally adjusted annual rate of 667,000 units last year, highest level since March 2018. January's sales volume was revised to 636,000 units from the previously reported 607,000 units.
Economists who were asked by Reuters, had forecast new home sales, accounting for about 11 percent of housing market sales, increasing 1.3 percent to a pace of 620,000 units in February.
New home sales are deducted from permits and tend to be volatile in a month to month basis. They rose 0.6 percent from a year ago. New home sales tend to respond more quickly to changes in mortgage rates.
The 30-year fixed mortgage rate fluctuated to a year above 4.06 percent last year from an average of 4.28 percent last week, according to data from the mortgage finance firm Freddie Mac.
Mortgages have declined since the Federal Reserve signaled a long break in interest rates this year. Lower borrowing costs, lower house price inflation and rising wages have improved housing affordability.
But expensive timber as well as land and labor shortages remain a challenge for builders. Investment in housing construction contracted 0.3 per cent in 201
New home market in the South, which accounts for most of the transactions, rose 1.8 per cent in February to its highest level since July 2007. Sales increased by 26.9 percent in the Northeast and jumped 28.3 percent in the Midwest. However, they were unchanged in the West.
The median new housing price fell 3.6 percent to $ 315,300 in February from a year ago. There were 340,000 new homes on the market last year, down 0.6 per cent from January.
By February sales time, it would take 6.1 months to clear the housing on the market, down from 6.5 months in January. Just under two-thirds of the houses sold last month were either under construction or still built.