WASHINGTON (Reuters) - Sales of new U.S. single-family homes jumped to a nine-month high in December, boosted by a severe shortage of previously owned houses on the market.
New home sales increased 11.9% to a seasonally adjusted annual rate of 811,000 units last month, the highest level since March, the Commerce Department said on Wednesday. November's sales pace was revised down to 725,000 units from the previously reported 744,000 units.
Sales soared in the densely populated South as well as in the Midwest. They also rose in the West, but tumbled in the Northeast.
Economists polled by Reuters had forecast new home sales, which account for more than 10% of U.S. home sales, rising to a rate of 760,000 units. New home sales are a leading indicator of the housing market, but can be volatile on a monthly basis.
Sales dropped 14.0% on a year-on-year basis in December. They peaked at a rate of 993,000 units in January, which was the highest since the end of 2006. About 762,000 new homes were sold in 2021, down 7.3% from 2020.
The new housing market is being underpinned by a record-low inventory of previously owned homes. Demand for housing is expected to remain strong even as mortgage rates increase, which together with high prices will further erode affordability.
The median new house price in December rose 3.4% from a year ago to $377,700. There were 403,000 new homes on the market, up from 397,000 units in November.
Houses under construction made up 65.3% of the inventory, with homes yet to be built accounting for about 25%.
The government last week reported the housing construction backlog surged to a record high in December while completions tumbled as well. Builders are being hamstrung by sky-high prices for building materials, a situation that could worsen after the government nearly doubled duties on imported Canadian softwood lumber last November.
At December's sales pace it would take 6.0 months to clear the supply of houses on the market, down from 6.6 months in November.