span>span>Thursday 26th January /span>span>2023/span>span> - 15:17 (GMT)/span>/span>
New home sales in the US continued to decline during December, as rising interest rates weighed heavily on the country's housing market. According to data released by the National Association of Realtors (NAR), sales of new homes reached just 0.616 million, a 2.3% increase from the previous month and below market expectations of 0.617 million.
The latest figures come on the heels of last week's report that existing home sales dropped 1.5% to 4.02 million in December, marking the eleventh consecutive month of decline and the lowest level since 2010.
The data confirms a wider trend of slowing growth in the property market, primarily due to the sharp rise in borrowing costs. Despite a recent decrease, the average rate on a 30-year mortgage remains nearly double the 3.56% average rate of a year ago.
Mortgage rates are likely to remain a significant obstacle, as the Federal Reserve has signalled its intent to keep raising short-term rates. While inflation has begun to slow, some Fed officials argue that the central bank needs to keep hiking rates to ensure that its monetary policy goals are met.
In addition, a separate report from the NAR revealed that the median US house price increased at the slowest pace since the onset of the COVID-19 pandemic, as sellers in certain regions were forced to offer discounts. Despite this, average property prices still grew by 10.2% to $386,300 in 2022, an increase of 42% from 2019. This reflects the continued impact of ultra-low mortgage rates and pandemic-driven demand on the housing market.
