Pent-up demand for housing continues to lift new-home sales figures to their highest levels since 2008, according to new monthly figures released Tuesday by the Commerce Department.
New-home sales in November hit an annualized rate of 464,000, which is 16.6 percent higher than a year ago. The figure slipped 2.1 percent from October, but the rate of sales is still just below a five-year high.
Although the housing market still has a long way to go to make a full recovery, analysts said the latest numbers point to positive trends that are likely to pick up more steam in the new year, helping to buttress the U.S. economy even further as it slowly picks up momentum.
“The numbers keep improving every month,” said Patrick Newport, an economist with research firm IHS Global Insight. “They’re improving slowly, but they’re improving. This is one of the key pieces of the recovery.”
Newport said that based on current U.S. demographics, a healthy, normal housing market would see about 800,000 new-home sales in a year. IHS estimates that there will be about 430,000 sales this year and roughly 560,000 next year.
There appears to be more demand than home builders can keep up with, according to the new government figures. It took builders 3.1 months to sell a new home in November, near the record low set in October. One possible explanation, Newport said, is that small businesses that construct homes aren’t able to access enough credit, despite the Federal Reserve’s efforts to lower the cost of borrowing.
Demand from home buyers is also helping to push up the median sales price, which was $270,900 in November, up 4.5 percent compared with October.
Sales varied dramatically by region. In the Northeast and the West, sales rose 15.2 percent and 31.1 percent, respectively, in November over the previous month’s. In the Midwest, by contrast, sales fell 26.6 percent. In the South, which includes the Washington region, sales fell 9 percent.
Alongside the improved housing numbers, increased business investment could also be pushing up growth projections for the U.S. economy.
In other good news Tuesday, the government reported that new orders for durable goods, which are parts that go into final products such as cars, rose 3.5 percent in November, to $8.2 billion. The rise was largely driven by a 22 percent increase in aircraft orders.
Another key metric showing the willingness of businesses to invest also rose in November. New orders for capital goods such as aircraft, excluding defense spending, rose 9.4 percent from the previous month, to $88 billion.
“Businesses have been sidelined for quite some time, hesitant to invest in equipment, structures and certainly employees,” said Lindsey M. Piegza, chief economist at the investment banking and brokerage firm Sterne, Agee & Leach, in a research note. “However, as certainty appears to have returned to Washington in terms of spending and tax policy — at least through 2015 — businesses (and consumers) are beginning to loosen their purse strings, particularly amid improving global demand.”
The strength in Tuesday’s figures caused research firm Macroeconomic Advisers to raise its forecast of fourth-quarter economic growth to 2.6 percent, up from 2.3 percent.
“There’s strong reasons to be optimistic about 2014 and 2015,” Newport said.