US new home sales unexpectedly slump in November

Sales of new single-family houses fell 12.2% on the month to a seasonally-adjusted annual rate of 590,000. Economists were expecting sales to tick up to 685,000.

Compared with November 2022, sales were up 1.4%.

The figures showed that the median sales price of new houses sold in November was $434,700, up from $414,900 in October.

Kieran Clancy, senior US economist at Pantheon Macroeconomics, said the drop in November new home sales takes them to a new low for this year, and largely reflects the lagged effect of the spike in rates earlier this year.

"But mortgage rates are now falling sharply; the rate on a 30-year conventional mortgage fell to 6.83% last week, down nearly 110bp from the recent peak, in late October," he said.

"This will eventually feed through to higher new home sales, which also continue to benefit from a low - albeit steadily rising - level of existing home supply. New home supply, by contrast, remains more than ample, at 9.2 months of sales in November, compared with a pre-Covid trend of around six months.

"New home prices appear to have drifted lower over the past couple of months, as our second chart below shows, but it’s too early to say that a new downtrend has begun. New home prices already have fallen some 15% from their peak, unlike existing home prices, which are broadly unchanged from their peak, thanks to the acute lack of inventory. Most national home price indexes exclude new homes, however, which is why closely-followed indexes like the Case-Shiller and FHFA series are broadly flat."