The housing market continues to defy gravity as new home sales rose 11.9% in December to an annual rate of 811,000, the Census Bureau and Department of Housing and Urban Development reported on Wednesday.
The reading came in higher than predictions for a rate of 765,000. It also suggests that rising mortgage rates have so far not curtailed demand. For all of 2021, 762,000 new homes were sold, 7.3% below the 822,000 sold in 2020.
The median sales prices of new homes sold in December was $377,700.
“With rising construction costs, new homes are priced at a premium,” Realtor.com Chief Economist Danielle Hale said in a statement. “So far, buyers have been willing to pay up for the larger, more flexible spaces, promise of lower maintenance and better energy efficiency that new homes offer, even if it sometimes means waiting. The median sales price of new homes rose in December and hit a new annual high in 2021.”
Housing has remained one of the hottest sectors of the economy throughout the coronavirus pandemic, as tight inventory and high demand have caused buyers to move quickly when available homes come onto the market. The high prices have also led sellers to put their homes on the market. As mortgage rates increase, with the Federal Reserve beginning to tighten monetary policy with higher interest rates, the pressure on those shopping for homes to buy has only increased.
December’s growth “is notable because November and December are historically slower months for sales due to the Holidays, yet performed strongly this year,” says Kelly Mangold of RCLCO Real Estate Consulting. “Residential market sentiment remains relatively strong, and there is much to remain optimistic about heading into January.”
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