US sales of new homes slipped 2.1 percent in Nov.

US sales of new homes slipped 2.1 percent in Nov.
WASHINGTON (AP) - Sales of new homes slipped slightly in November after a big surge the previous month. The figures add to evidence that the housing market is struggling to sustain the pace of its recovery.

Sales dipped 2.1 percent in November to a seasonally adjusted annual rate of 464,000, the Commerce Department said Tuesday. In October, new-home sales had shot up 17.6 percent, the biggest monthly gain in more two decades. October's annual sales pace of 474,000 was the highest since July 2008.

The annual pace of new-home sales remains well below the 700,000 generally consistent with a healthy market.

Before the rebound in October, home sales had slowed over the summer. They did so after mortgage rates spiked amid investor concerns about how fast the Federal Reserve would remove its support for the economy.

In November, sales of new homes dropped 26.6 percent in the Midwest and 9.1 percent in the South. Sales rose 31.1 percent in the West and 15.2 percent in the Northeast.

The median price of a new home sold in November rose to $270,900, up 10.6 percent from a year ago.

There were 167,000 new homes on the market at the end of November, a drop of 6.7 percent from the October inventory. That would translate into a tight supply of 4.3 months at the November sales pace.

Mortgage rates remain nearly a full percentage point higher than in the spring. Rates rose in May after the Fed first signaled that it might slow its $85 billion in monthly bond purchases. But mortgage rates have declined a bit after peaking at 4.6 percent in August. The latest average rate on a 30-year fixed mortgage was 4.29 percent.

The National Association of Realtors said last week that the number of people who bought existing homes in November fell for a third straight month. The lingering effects of the partial government shutdown in October might have deterred some sales.

Still, the government said builders broke ground on homes at a seasonally adjusted annual rate of 1.09 million homes and apartments in November. That was the fastest pace since February 2008 and was 23 percent higher than in October.

The Fed announced last week that it will begin in January its long-anticipated move to trim its monthly bond purchases. The Fed said it would cut the $85 billion in purchases it has been making by a modest $10 billion. It indicated that further cuts would take place in coming months if the economy keeps improving.

Long-term rates could head up after the Fed pulls back on its bond buying.