Sales of newly built single-family homes fell 12.2 percent between October and November to an annual rate of 590,000, but lower interest rates may bring relief.

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Elevated mortgage rates dragged down new-home sales in November, but sales should perform better in the months to come.

Sales of newly built single-family homes fell 12.2 percent between October and November to an annual rate of 590,000, according to data released Friday by the U.S. Department of Housing and Development and U.S. Census Bureau — the lowest annual rate seen in a year but still a 3.9 percent increase from November 2022.

While sales dropped in November, housing experts say they should pick up noticeably in the months to come, with mortgage rates falling below 7 percent in December for the first time in months, after hitting a high of 7.79 percent during November.

“New home sales activity should improve in the months ahead as mortgage interest rates settle in below a 7 percent rate,” said Alicia Huey, chairman of the National Association of Home Builders. “Our latest builder survey turned positive in December, with builders indicating they expect a rise in future sales.”

The median price of new homes sold during November was $434,700 according to the Census Bureau, while the average sales price was $488,900.

The seasonally adjusted estimate of new homes for sale at the end of November was 451,000, representing a supply of 9.2 months at the current sales rate.

Regionally, on a year-to-date basis, new home sales are up in all four regions: up 4.9 percent in the Northeast, 3.6 percent in the Midwest, 4.4 percent in the South and 2.6 percent in the West.

Newly built homes surged in popularity during 2023 as homebuyers turned to new builds due to an extreme shortage of existing inventory, with new-home sales expected to end the year 5 percent higher than in 2022. By contrast, sales of existing homes are expected to end 2023 20 percent lower than last year.

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