New home sales surge

November purchases up 17.5 percent; monthly rise best in 25 years.

WASHINGTON — Americans stepped up their purchases of new homes at the fastest pace in more than 25 years in November, with sales skyrocketing 17.5 percent amid robust demand and a continued shortage of existing homes on the market.

New-home sales last month jumped to a seasonally adjusted annual rate of 733,000 units compared with 624,000 in October, the Commerce Department said Friday. That’s the biggest monthly gain since January 1992 and the most homes sold in a month since July 2007, just months before the economic downturn.

The sharp upswing is a sign of the strong demand from would-be homebuyers amid the strengthening economy. Sales of new homes can be volatile on a monthly basis, but purchases have climbed 9.1 percent year-to-date and outstripped the increase in construction of single-family houses.

The inventory of exist-

ing homes on the market has steadily fallen on an annual basis, while new construction has been unable to keep up with sales that are on their best annual pace since 2007.

The demand propelled in part by unemployment at a 17 year-low has also exposed an underlying problem with the housing market: there simply aren’t enough homes being listed for sale.

The big November increase in new-home sales was somewhat tempered with revisions for previous months, particularly

October, which was revised down from 685,000 homes sold to 624,000.

The growth was led by sales in the West, which increased 31.1 percent. Sales in the South were up 14.9 percent, followed by the Northeast at 9.5 percent and the Midwest at 6.9 percent.

“This is a barn-burner of a report,” said Carl Riccadonna of Bloomberg Economics. “While there is likely some upward bias coming from the South due to hurricane recovery, the surge in the West and solid gain in the Northeast, as well, likely signal some homeowners rushing to close deals before new tax changes take

effect in 2018. This year-end scramble will likely carry into the December data, as well. The risk is that it is pulling demand forward into 2017, and could then lead to prolonged soft patch in early 2018. Inventory scarcity will be a positive development for homebuilders in the near term.”

The median price of homes sold in November was $318,700, a 1.2 percent increase from a year ago.

A survey earlier this week showed that U.S. homebuilders are feeling more optimistic than they have in nearly two decades. The National Association of Home Builders/ Wells Fargo builder sentiment index released Monday rose five points to 74 this month. That’s the highest reading since July 1999, more than 18 years ago.

Housing demand is benefiting from a strong job market and still-low mortgage costs. New-home sales, tabulated when contracts get signed, account for about 10 percent of the market. They’re considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close and are reported by the National Association of Realtors.