WASHINGTON: US home sales jumped to their highest level in nearly two years in December, the latest indication that lower mortgage rates are helping the housing market to regain its footing after hitting a soft patch in 2018, though record low inventory could be an obstacle to continued strong gains.
Existing home sales increased 3.6 per cent to a seasonally-adjusted annual rate of 5.54 million units last month, the highest level since February 2018, boosted by a surge in sales of multi-family housing units and gains in single-family home dwellings. November's sales pace was unrevised at 5.35 million units.
The housing market is being supported by cheaper mortgage rates after the Federal Reserve cut interest rates three times last year. The 30-year fixed mortgage rate has dropped to an average of 3.65 per cent from its peak of 4.94 per cent in November 2018, according to data from mortgage finance agency Freddie Mac.
According to the NAR, there was a 14 per cent drop from a year earlier in sales of houses priced US$100,000 and below. The Atlanta Fed is forecasting GDP to rise at a 1.8 per cent annualized rate in the fourth quarter. The economy grew at a 2.1 per cent rate in the July-September period. The government will publish its snapshot of fourth-quarter GDP next Thursday.
The NAR report likely exaggerates the pace of house price appreciation because of sampling methodology.
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