New Home Sales in U.S. Drop Slightly in November

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Sales of new single-family homes dropped 2.1 percent in November, after increasing by a record 33 percent last month, according to the Census Bureau.

New home sales reached a seasonally adjusted annual rate of 464,000 in November, from the revised October rate of 474,000. However, the figure is 16.6 percent higher than last year, and exceeded predictions by economists. 

Home purchases are picking up as home builders' confidence reached levels seen in 2005. In October, building permits reached an almost five-year high, indicating an increase in new-home construction in coming months will release pent-up demand in the market. 

"You did have a rise in mortgage rates, but house prices are still about 20 percent below the peak, affordability is high, and the labor market is improving," Gennadiy Goldberg, an economist at TD Securities USA LLC in New York, told Bloomberg. "There's a natural demand for more housing."

The median new-home sales price reached $270,900 in November, increasing from $245,800 last month. The seasonally adjusted estimate of new homes at the end of November was 167,000, representing a 4.3-months supply at the current sales rate.