New single-family home purchases rose 2.3% to a seasonally adjusted annual rate of 616,000 units, the U.S. Department of Commerce reported Thursday. Economists surveyed by Refinitiv expected new home sales — which account for a small percentage of total sales — to hit 617,000 last month.
Just 644,000 new homes were bought in 2022, the smallest annual gain in four years.
Policymakers already lifted the benchmark federal funds rate seven consecutive times in 2022 and have indicated they plan to continue raising rates higher this year as they try to crush inflation that is still running abnormally high.
Still, demand has shown early signs of returning as mortgage rates continue to fall from a record high of 7.08% in November.
The average rate for a 30-year fixed mortgage dropped to 6.15% this week, according to data from mortgage lender Freddie Mac. However, that remains significantly higher than just one year ago, when rates hovered around 3.56%.
Mortgage applications are up 28% from early November, according to a separate report from Redfin, which has sent the typical homebuyer's mortgage payment down about 10% – or roughly $180 – since the fall.
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