By Timothy R. Homan
WASHINGTON - Sales of new U.S. homes rose in November to a seven-month high, adding to evidence of stabilization in the housing market.
Purchases of single-family properties increased 1.6 percent to a 315,000 annual pace, figures from the Commerce Department showed Friday in Washington. The gain pushed the number of new homes on the market to a record low.
The industry that precipitated the 18-month recession that ended in June 2009 is on the mend as construction picks up, builder confidence improves and inventories of existing homes decline. At the same time, another wave of foreclosures may weigh on real estate values next year.
“New-home sales look flat for the year but an improving economic backdrop suggests a gradual pickup in buying,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pa., said before the report. “Data for the month send a positive message about demand.”
The November pace matched the median of 73 economists’ projections in a Bloomberg News survey. Estimates ranged from 298,000 to 350,000. The government revised October demand to a 310,000 rate from a previously reported 307,000.
Stocks held gains after the report, with the Standard & Poor’s 500 Index climbing 0.3 percent to 1,257.57 at 10:05 a.m. in New York. The yield on the benchmark 10-year Treasury note rose to 2 percent from 1.95 percent late yesterday.
Separate figures Friday showed personal spending rose less than forecast and an increase in orders for big-ticket items. Purchases rose 0.1 percent for a second month, according to the Commerce Department. Incomes also grew 0.1 percent, the weakest in three months, after a 0.4 percent rise in October.
Orders for durable goods jumped 3.8 percent in November, led by a surge in bookings for aircraft, the agency also said. Demand for business equipment dropped 1.2 percent in November, the most since January.
The increase in new-home purchases was paced by a 12.9 percent jump in the South and a 7.5 percent gain in the Midwest Demand plunged 26.3 percent in the Northeast to the lowest on record. Sales slumped 16.9 percent in the West.
The median price of a new house purchased last month fell 2.5 percent from November 2010 to $214,100, the cheapest in a year, Friday's report showed.
The supply of homes at the current sales rate dropped to 6 months’ worth, the lowest since March 2006, from 6.2 months in October. There were 158,000 new houses on the market at the end of last month, the fewest since record-keeping began in 1963.
Still, 2011 may surpass last year as the weakest ever for new-home sales. Demand is on pace to reach 304,000 this year, less than the 323,000 in 2010 that was the lowest since data- keeping began, according to Bloomberg calculations.
Sales of previously owned homes, which make up about 94 percent of the market, rose 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said this week. The group revised down figures going back to 2007 by an average 14 percent, putting them more in line with other measures of demand.
New-home sales, which are tabulated when contracts are signed, have lost their ability to forecast the broader market as demand shifts to previously owned houses. Purchases of existing houses are calculated when a deal closes about a month or two later.
Builders increased work on new projects last month. Housing starts rose 9.3 percent to a 685,000 rate in November, the fastest pace since April 2010, Commerce Department data show. That compares with last year’s tally of 587,000, the second- fewest on record after 2009’s record low of 554,000.
KB Home, the Los Angeles-based homebuilder that targets first-time buyers, this week reported a decline in quarterly profit and gross margins weaker than the company forecast earlier.
At the same time, the Los Angeles-based builder said net orders increased 38 percent in the fourth quarter from the same three months last year.
Policy makers are pushing programs aimed at reviving the U.S. housing market. The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.
Federal Reserve officials reiterated at a meeting this month that they will keep their benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.