In December, 53% of the estimated 38,000 monthly sales were for homes priced at less than $300,000.
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The Midwest saw the strongest new home sales last month, with a 31.6% surge.
The Commerce Department said on Wednesday sales rose 10.8 percent to a seasonally adjusted annual rate of 544,000 units, the highest level since February.
“This is a promising sign for the housing market as we move into 2016”, said Tian Liu, chief economist at Genworth Mortgage Insurance in Raleigh, North Carolina. Economists surveyed by Bloomberg had predicted new, single-family home sales would rise 2%. While more Americans were able to find work this past year and mortgage rates remained low, the overall number of houses on the market remains low, down some 3.8 percent from 2014 levels. The.
A nationwide snapshot of home values indicate that the market has almost recovered to numbers similar to July 2006 levels, before the housing bubble burst and led to a years-long recession.
Builders responded to the demand by increasing construction. Sales of homes in the range of $400,000 to $499,999 fell from 15% of all sales to 14%, and sales rose from 8% to 10% for homes sold in a range of $500,000 to $749,999. The industry generally considers six months’ supply to be healthy. They were almost flat in the South – the country’s largest housing market.
Home sales for properties priced above $750,000 fell by three percentage points and accounted for 3% of all new home sales in December.
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“This is likely due to a combination of low inventory of new starter homes and fewer first-time homebuyers”, McLaughlin said. Freddie Mac reported the average 30-year fixed rate mortgage at 3.81 percent last week, which was down slightly from the 3.92 percent a week earlier. Mortgage rates remain low by historical standards, even after the Fed’s interest rate hike.
