U.S. new home sales fall in December, likely to rise gradually in H1 2017

New home sales in the U.S. ended last year on a weak footing due to higher mortgage rates. Also the winter weather is expected to have put off some potential homebuyers. In December, new home sales dropped 10.4 percent to 536,000 unit annual pace, owing to a 40 basis point rise in mortgage rates and the return of winter weather. Earlier in the week, existing home sales measure closings and reflect mortgage rates from sales contracts signed one or two months earlier.

However, in spite of the decline recorded in December, new home sales rose strongly in 2016 as a whole. Annual sales were up 12.2 percent, increasing to 563,000 homes sold. Also, December is a lighter month for sales and thus the magnitude of the monthly swings tends to be exaggerated, noted Wells Fargo in a research report.

The U.S. home sales are likely to increase gradually in the first half of this year, as consumers adjust to higher interest rates and look for continued rebound in sales in the course of 2017, added Wells Fargo.

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