In a rebound from the previous month’s hurricane-related slowdown, sales of new single-family homes in the United States showed an increase in November. However, despite the uptick in sales, rising mortgage rates may still pose a hindrance to sales next year.
According to a report by Reuters, the U.S. Census Bureau announced on Monday, December 23rd, that new home sales in the previous month surged by 5.9%, with the seasonally adjusted annual sales rate reaching 664,000 units. October’s sales figures were revised upward from the previously reported 610,000 units to 627,000 units.
Economists surveyed by Reuters had forecasted a rebound in new home sales to 660,000 units in November, accounting for approximately 15% of U.S. home sales. New home sales are calculated at the time of contract signings and may fluctuate monthly. Sales of new homes in November grew by 8.7% compared to the same period last year.
Data from mortgage financing institution Freddie Mac showed that the average rate for a popular 30-year fixed-rate mortgage rose to 6.72% after dropping to 6.60% the previous week.
The Federal Reserve lowered its benchmark overnight interest rate by 25 basis points last week to a range of 4.25% to 4.50%. However, it is projected that there will only be two interest rate cuts in 2025 as the economy shows resilience and inflation rates remain high.
In September, the Federal Reserve had forecasted four rate cuts in 2025. However, the latest projections indicate a smaller rate cut next year, reflecting uncertainty in the policies to be implemented by President-elect Trump’s new administration. These policies include tariffs on imported goods, tax cuts, and large-scale deportation of undocumented immigrants, leading economists to warn that these measures could result in inflation.
Last week, the yield on the 10-year U.S. Treasury bond reached a new high in six and a half months. Mortgage rates often move in sync with fluctuations in the yield of the 10-year U.S. Treasury bond.