Purchases of new homes fell in December to a 10-month low, suggesting the post-election jump in mortgage rates pushed out potential buyers.
Single-family house sales dropped 10.4%, the most in almost two years, to a 536,000 annualized pace, Commerce Department data showed Thursday. The median forecast in a Bloomberg survey was for 588,000.
The figures indicate that the increase in mortgage rates curbed momentum in the housing market after steady job gains and historically low borrowing costs helped push full-year sales to the highest since 2007. Stricter lending standards also remain a hurdle for buyers this year.
Theaverage interest rateon a 30-year fixed mortgage reached 4.32% at the end of December, the highest since April 2014, according to Freddie Mac figures. That was up from 3.54% just before the Nov. 8 election. It was 4.09% in the week ended Jan. 19.
The supply of homes for sale increased to 5.8 months, the highest since September 2015, from five months in November. There were 259,000 new houses on the market at the end of December, the most since 2009.
Economists’ estimates for the December sales rate ranged from 550,000 to 625,000. The Commerce Department revised the November reading to a 598,000 pace from a previously estimated 592,000.
Optimism about President Trump’s plans to spur economic growth through tax cuts and looser regulation triggered a rise in Treasury yields and a corresponding increase in mortgage rates. The Federal Reserve is also projected to raise its benchmark interest rate several times this year.
The Commerce Department said there was 90% confidence that the change in sales last month ranged from a 22.6% drop to a 1.8% increase, underscoring the volatility of the data.
The drop in demand last month was led by a 41% drop in the Midwest and 12.6% decline in the South, the biggest region. Sales in the West fell 1.3%, while those in the Northeast jumped 48.4%.
The median sales price of a new house increased 7.9% from December 2015 to $322,500, Thursday’s report showed.
New-home sales, which account for about 10% of the residential market, are tabulated when contracts are signed. That makes them a timelier barometer than transactions on existing homes.
Sales of previously owned homes declined in December while closing the strongest year since 2006, National Association of Realtors data showed Tuesday. Contract closings, which reflect signings made a month or two earlier, fell 2.8% to a 5.49 million annual rate, as inventory declined to the lowest since 1999.