New home sales rose 17.5 percent in November compared to the previous month, making it the largest monthly increase since July 2007.
Additionally, new home sales in November was 26.6 percent higher than it was in November 2016.
“Approximately 70 percent of the increase in sales during the month was driven by properties where construction has not yet started, which indicates strong buyer demand and some construction backlogs,” Yun Cohen, a research assistant at the National Association of Federally Insured Credit Unions, wrote in this week’s NAFCU Macro Data Flash report.
Cohen added that construction activity has been undermined by shortages of labor and lots.
“However, builders’ confidence for newly-built single-family homes rose to an 18 year-high in December according to the National Association of Home Builders, which bodes well for housing starts in 2018,” Cohen continued.
Sales were up in all four regions in November, led by the West, which saw a 31.1 percent in new home sales. Sales were up 14.9 percent in the South, 9.5 percent in the Northeast, and 6.9 percent in the Midwest.
As of the end of November, there were 4.6 months of supply, down from 5.4 months in October.
In addition, the median new-home price decreased from $319,600 in October to $318,700 in November. However, November’s prices were 1.2 percent higher than a year ago. Cohen noted that the lack of affordable inventory remains the biggest constraint on the housing market.