U.S. Housing Market Gains Momentum Amid Rising Mortgage Rates

Sales of new U.S. single-family homes increased unexpectedly in December 2024, signifying a housing market rebound despite high mortgage rates. December's sales rose 3.6% to 698,000 units, with yearly sales reaching 683,000, a 2.5% increase. Rising inventory contributes to slowing home price increases.

In December 2024, sales of new U.S. single-family homes surged more than anticipated, signaling renewed momentum in the housing market, despite ongoing constraints from rising mortgage rates. According to the Commerce Department, new home sales rose 3.6% to a seasonally adjusted annual rate of 698,000 units.

The increase marked a robust conclusion to the year, with sales gaining 6.7% compared to December 2023. Median home prices climbed 2.1% to $427,000. Despite this, rising inventories are slowing the pace of price growth. Residential investment rebounded in the fourth quarter following its drag on GDP for two quarters.

Despite these gains, high mortgage rates, influenced by broader economic factors, continue to challenge market growth. The Federal Reserve's cautious policy adjustments indicate concern over potential inflation, as mortgage rates hover near 7%. Builders face decisions on new projects amid a high inventory level, which could affect future supply dynamics.

(With inputs from agencies.)