November marked a revival of new home sales in the U.S. According to the Commerce Department, new home sales spiked by 5.2 percent last month to an annual rate of 592,000. This was up from 563,000 new home sales in October and easily surpassed the November projection of 580,000 new units sold.
New home sales last month reached their highest level since November. On a year-over-year basis, new home sales were up a whopping 16.5 percent from November 2015.
The Commerce Department report comes on the heels of the National Association of Realtors study released Wednesday that found existing home sales unexpectedly rose as well in November. According to N.A.R., existing home sales climbed by 0.7 percent last month to an annual rate of 5.61 million. Economists had actually expected home sales to dip in November, not reach a nearly 10-year high.
The surge in new home sales last month was reportedly due largely to increased action in the Midwest. According to the Commerce Department, new home sales in the Midwest surged 43.8 percent in November to the highest level since October 2007. In the Western region, new home sales were up 7.7 percent to 154,000.
The Commerce Department also reported the median sales price of a new home in November was $305,400, up 0.9 percent from October’s median of $302,700. However, somewhat interestingly, the median sales price in November was actually down 3.7 percent from November 2016.
When it comes to the U.S. housing, the question now is what impact will rising interest rates have on the market. Just last week, the Federal Reserve raised its benchmark overnight interest rates by 25 base points to a range of 0.50 to 0.75 percent, CNBC noted in its report. Three more rate hikes are expected in the coming year.
Economists contacted were unclear on how these increases will affect the housing market’s momentum into the new years. But based off the November numbers, the pool of potential buyers is undoubtedly growing. And with home prices finally stabilizing, as the Commerce Department report showed, any interest rate hikes could still prove affordable for buyers.