Economists trying to predict the future of the housing market were thrown a curveball with the late-November announcement that new-home sales hit a record high in October.
According to the Commerce Department, new homes sold at an annual rate of 1.42 million. That's up from 1.26 million in September, and the increase is the biggest monthly jump in more than a dozen years.
It's not a trend that's likely to continue, however. Several news reports released after the data came out suggest that the unexpected increase (economists were reportedly predicting a slight decline from September to October) was in large part due to a last-minute “rush” of home-buyers trying to make their purchases before mortgage interest rates rose even higher. Interest rates have been trending upward as of late, and it is expected that they will climb even higher in 2006.
In other economic news, the Consumer Confidence Index — which, as we reported last month, fell precipitously in September and dipped further in October — surged back in November. The overall index was up more than 14 points, and both the Present Situation Index and the Expectations Index surged. Consumer confidence isn't as high as it was pre-Katrina, but the recent increase is a sign that the economy is rebounding, likely due in large part to the gasoline scare apparently being over.
NEW HOUSES SOLD AND FOR SALE