HousingWireHousingWire
New home sales continue to be a bright spot in a dismal housing market. The December report from the U.S. Census Bureau and Department of Housing and Urban Development shows new-home sales registering at a seasonally adjusted annual rate of 698,000, good for a 6.7% rise year over year and 3.6% higher than November.
Even better, new home sales for the calendar year 2024 are estimated at 683,000, which is 2.5% more than 2023 and the highest sales have been since 2021.
Still, higher new home sales doesn’t begin to offset the gap left by existing-home sales, which were at an almost 30-year low in 2024 at 4.06 million.
“In many markets, there was simply more new home inventory and some buyers who might have wanted to purchase an existing home were instead looking at new construction,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. “Home builders were able to offer prospective buyers concessions, including rate buydowns, to entice them to new home communities.”
Available new-home inventory is on a firm upward trajectory. Homes for sale sat at 495,000 on a seasonally adjusted annual basis, a 10% annual increase compared to last year and a 1.2% gain compared to November.
Months of supply has also remained high at 8.5 months. This is a 2.3% month-over-month drop, but it’s up 3.7% compared to last year. Months of supply hit its peak in October at 9.4 months.
Regionally the numbers were up across the board. The latest year-over-year jumps came from the Midwest (40.3%) and the Northeast (25.9%). The West (6.9%) and the South (0.5%) experienced more modest gains.
However, those jumps are less impactful because the total number of new home sales on a seasonally adjusted annual basis in the Midwest (87,000) and Northeast (34,000) are significantly fewer than the West (154,000) and South (423,000).
Existing-home sales finished the year strong with a 9.3% rise year over year, the highest annual gain since June 2021, but are still at historically low levels.
Inventory continues to be an issue in the existing-homes market. The brief drop in mortgage rates at the end of the summer loosened the “lock-in effect,” and homeowners started listing their homes, pushing inventory to 1,390,000 in September.
But the mortgage rate relief was short-lived and existing homes for sale have gone into free fall, currently sitting at 1,150,000.
“Mortgage rates have a massive impact on buyers’ purchasing power, and big swings in rates are impacting affordability and sales,” said Zillow Senior Economist Orphe Divounguy in a statement. “While existing home sales fell to a near 30-year low in 2024, new home sales continued to increase. This is because the decline in existing home sales is partly due to rate lock – existing homeowners refusing to give up their ultra-low pandemic mortgage rates.”
