U.S. new-home sales soar in December

New home sales in December far surpassed expectations, soaring 10.8% between November and December to an annual rate of 544,000, the Commerce Department reported Wednesday. November’s sales pace was revised up to 491,000 units from the previously reported 490,000 units.

The Commerce Department noted that the annual rate of new home sales in December is also up by 9.9 percent compared to 495,000 in the same month a year ago. The increase almost pulled the sales rate even with the level of 545,000 in February 2015 and points to continued momentum for real estate and construction in the opening months of this year.

The median sales price decreased 4.3% from December 2014 to US$288,900, the report showed.

“The dearth of inventory has really taken its toll on the market”, said Nela Richardson, chief economist at Redfin, a brokerage firm.

That’s prompted an increase in mortgage applications for home purchases. At the end of December, the number of new homes for sale totaled 237,000 and represented a supply of 5.2 months at the current sales rate. Sales grew by at 21.0% in the West and 20.8% in the Northeast. “Without more listings what we’ll see are higher prices and lower sales volumes?- a lousy way to start a new year for homebuyers”.

Mortgage buyer Freddie Mac says the average rate on a 30-year fixed-rate mortgage declined to 3.81 percent last week from 3.92 percent a week earlier. The latter are calculated when a contract closes, typically a month or two later, and account for about 90% of the market.

The U.S. central bank’s policy-setting committee is due to issue its monetary policy statement at 2 p.m. EST (1900 GMT).