U.S. New Home Sales Unexpectedly Surge For Second Straight Month In November

New home sales in the U.S. unexpectedly showed a sharp increase for the second consecutive month in November, according to a report released by the Commerce Department on Friday.

The report said new home sales surged by 5.8 percent to an annual rate of 640,000 in November after soaring by 8.2 percent to a revised rate of 605,000 in October.

Economists had expected new home sales to tumble by 5.1 percent to an annual rate of 600,000 from the 632,000 originally reported for the previous month.

Despite another sharp increase, new home sales in November were down by 15.3 percent compared to the same month a year ago.

"While sales were revised down for the prior three months, new home sales are still holding up better than expected given the erosion in homebuying affordability that has occurred this year," said Nancy Vanden Houten, Lead US Economist at Oxford Economics.

She added, "We see limited upside for new home sales in the months ahead, but the incentives offered by homebuilders and the recent decline in mortgage rates may keep a floor under sales."

The unexpected monthly spike came as new home sales in the West and Midwest skyrocketed by 27.6 percent and 21.3 percent, respectively.

Meanwhile, new home sales in the South slumped by 2.1 percent and new home sales in the Northeast plunged by 8.5 percent.

The Commerce Department also said the median sales price of new houses sold in November was $471,200, down 2.8 percent from $484,700 in October but up 9.5 percent from $430,300 a year ago.

The estimate of new houses for sale at the end of November was 461,000, down 1.7 percent from 469,000 in October but up 18.2 percent from 390,000 in November 2021.

The housing inventory in November represents 8.6 months of supply at the current sales rate compared to 9.3 months in October and 6.2 months a year ago.

On Wednesday, the National Association of Realtors released a separate report showing a continued slump in U.S. existing home sales in the month of November.

NAR said existing home sales dove by 7.7 percent to an annual rate of 4.09 million in November after plunging by 5.9 percent to a rate of 4.43 million in October. Economists had expected existing home sales to tumble by 5.2 percent to a rate of 4.20 million.

Existing home sales decreased for the tenth consecutive month and are down by 35.4 percent compared to the same month a year ago.