Posted: March 19th, 2024
Amidst a backdrop of moderating mortgage rates, December witnessed a notable rebound in new home sales, instilling optimism among experts and builders for the trajectory of 2024.
According to data from the U.S. Census Bureau and the Department of Housing and Urban Development, new home sales surged by 8.0% in December, reaching a seasonally adjusted annual rate of 664,000 units. This increase, both month over month and year over year, effectively countered the 9.0% decline experienced in November. Moreover, November's sales figures were revised upward, from 590,000 to 615,000 units. For the entirety of 2023, new home sales averaged a pace of 668,000 units, marking an improvement from 2022's average of 641,000 units.
The resurgence in sales surpassed economists' expectations, with a Reuters poll forecasting a pace of 645,000 units.
The boost in sales can be attributed primarily to the easing of mortgage rates, alongside ample supply and stabilizing home prices. Unlike the resale market grappling with inventory challenges, new homes experienced a drop in median sales price by 3.0% from November and 13.8% from December 2022, settling at $413,200. Home builders have proactively offered discounts to attract buyers, further contributing to the decline in median prices.
Interestingly, there's a noticeable trend toward smaller newly completed houses, reflected in the shrinking median floor space of single-family homes, according to Census data. This adjustment in the mix of new homes sold may have influenced the decline in prices.
Despite challenges, experts remain optimistic about the new home market's resilience. The fundamentals supporting its strength, coupled with lower mortgage rates, position the market favorably for continued growth. Builder confidence, as measured by the NAHB/Wells Fargo Housing Market Index, surged by seven points to a reading of 44 in January.
As a mortgage broker, it's essential to stay attuned to these market dynamics. If you're considering purchasing a new home, now may be an opportune time to explore your options. Connect with us to discuss your financing needs and take advantage of favorable conditions in the new home market. Let's work together to turn your homeownership dreams into reality.
Best regards,
Your Mohawk Mortgage Man