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New US home sales fall in 2022 on higher mortgage rates

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New home sales fell 16.4 percent last year from 2021, according to Commerce Department data./AFP
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Jan 27, 2023 - 06:22 AM

WASHINGTON — Sales of new US homes exceeded expectations in December but slumped for all of 2022, according to government data released Thursday, as higher mortgage rates weighed on potential buyers.

The interest-sensitive real estate sector has been hit as the central bank lifted the benchmark lending rate seven times last year, in hopes of cooling demand and lowering surging inflation.

Sales of new single-family houses ticked up 2.3 percent in December to an annual rate of 616,000, seasonally adjusted, said the Commerce Department.

This was better than analysts expected and the comparison came against November’s revised rate of 602,000, which had been adjusted significantly lower.

For all of 2022, an estimated 644,000 new homes were sold — a 16.4 percent plunge from 2021, the report said.

But new properties make up a very small portion of overall home sales.

The median sales price in December decelerated for a second month as well to $442,100, data showed.

Apart from elevated mortgage rates, analysts have pointed to a lack of existing inventory as a reason that buyers are looking to new properties.

Monthly data can also be volatile.

There was a nine-month supply of new homes in December, down for a third month, the numbers showed.

“Overall, higher mortgage rates are impacting affordability and are weighing heavily on home sales, a trend that is not yet showing any sign of stabilizing or reversing,” said Rubeela Farooqi of High Frequency Economics.

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