New-home sales posted a strong rebound in 2016, the latest data release from the Commerce Department shows. Sales of newly built single-family homes increased 12.2 percent in 2016 year over year, reaching 563,000 units. That is the highest annual rate since 2007.

"We are encouraged by the growth in the housing sector last year, and by the fact that builders increased inventory by 10 percent in anticipation of future business," says Robert Dietz, chief economist of the National Association of Home Builders. "NAHB's forecast calls for continued upward momentum this year, with housing starts expected to rise 10 percent over the course of 2017."

Still, new-home sales failed to keep pace closing out 2016. The Commerce Department reported Thursday that new-home sales plunged 10.4 percent in December month over month to a seasonally adjusted annual rate of 536,000 units. Inventories of new-home sales was 259,000 in December, a 5.8-month supply at the current sales pace. The median sales price of a new house sold was $322,500.

Across the country, new-home sales saw the largest spike in the Northeast in December, with new-home sales jumping 48.4 percent. Meanwhile, sales plunged 41 percent in the Midwest, by 12.6 percent in the South, and by a more modest decrease of 1.3 percent in the West, the Commerce Department reported.

"To ensure sales continue to move forward in 2017, builders need to price their homes competitively, especially given that mortgage interest rates are expected to rise this year," says NAHB Chairman Granger MacDonald.

Source: National Association of Home Builders