In a latest report released by the National Association of Home Builders (NAHB), it was revealed that the sales of newly-built single family homes fell slightly in November. However, experts say that the pace of sales is steady and is a reflection of a strengthening market and economy.
The report states that sales of new single family homes dropped 2.1 percent on a month on month basis. The rate is about 16.6 percent higher than what was recorded in November 2012. According to Bloomberg, the percentage of sales is also higher than what was predicted. A median survey of 75 economists forecast the number to be 440,000. However, the actual figure zeroed in on 464,000.
The third quarter of 2013 has been pointing towards a strong market. In October 2013, new home sales had hiked 17.6 percent, the highest since 1992. September had also posted a sturdy 3.9 percent growth in sales.
"It's a holly, jolly data Christmas for the economy as all signs point to an accelerating economy," Joel Naroff, chief economist at Naroff Economic Advisors told The Wall Street Journal.
However, some problems still persist. Supply of new homes is still at its lowest since June and is getting tighter. The Journal explains that at November's sales pace, it would take 4.3 months to exhaust all the existing stock. In October, the estimated number was 4.5 months.
Interest rates have also been rising on the fear of Federal Bank cutting its bond buying policy. As of Dec. 19, 2013, the average 30-year fixed mortgage rates went up 0.05 percent to 4.47 percent and the average 15-year mortgage rates went up 0.08 percent to 3.51 percent, just in a week's time.
So what exactly is fuelling this steady growth? According to experts, the low prices and improving economy is holding the market firmly.
"You did have a rise in mortgage rates, but house prices are still about 20 percent below the peak, affordability is high, and the labor market is improving. There's a natural demand for more housing," Gennadiy Goldberg, an economist at TD Securities USA LLC told Bloomberg.
"The previous three months for new-home sales have all been revised up, and the final quarter of 2013 is shaping up to be the best quarter since the second quarter of 2008. Historically low interest rates, affordable home prices and a healing economy are bringing buyers back into the marketplace," David Crowe, Chief Economist at NAHB said in the report.
Buyer cautiousness bogged down the pace of sales in November. However, considering the declining rate of unemployment and improving affordability rates, the market is definitely mapping a steady growth.