Early 2024 Sees Boost in New Home Sales Thanks to Stable Mortgage Rates
The housing market has started 2024 on a strong note with an increase in new home sales, as stable mortgage rates have spurred buyer interest in January. According to the latest data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes rose by 1.5% to a seasonally adjusted annual rate of 661,000 units, compared to a revised December figure. This pace marks a 1.8% increase from the same period last year, reflecting a modest but steady upward trend in the housing market.
New home sales are counted at the moment a sales contract is signed or ahttps://www.census.gov/ deposit is accepted. These homes can range from not yet started, to under construction, to completed. The report adjusts for seasonal variations, projecting that if the current sales pace continues unabated, around 661,000 new homes would be sold over the next year.
In terms of inventory, the stock of new single-family homes in January was recorded at 456,000, up 3.9% from January last year. This level translates to an 8.3 months’ supply at the current sales pace, which is somewhat above the six months’ supply that is traditionally viewed as a marker of a balanced housing market.
The median sale price of new homes in January stood at $420,700, a 1.8% increase from December and a slight decrease of 2.6% from the previous year. Despite the general affordability challenges in the housing market, the proportion of new homes priced below the $300,000 entry-level mark has continued to shrink, comprising just 15% of all sales. Conversely, 34% of new homes were priced above $500,000, indicating a shift towards higher-end market dynamics, with the majority of homes falling in the $300,000 to $500,000 price range.
Regional variations in new home sales were also significant. On a year-over-year basis, the Northeast saw a rise of 4.9% in new home sales, while the West experienced a substantial increase of 57.0%. In contrast, sales in the Midwest declined by 4.1%, and the South saw a decrease of 13.5%.
The early 2024 data suggests a housing market that is adjusting to economic conditions, with stable mortgage rates providing a critical support for new home sales. While the market continues to deal with inventory issues and shifting affordability, the overall upward trend in new home sales offers a positive outlook for the U.S. housing sector as it navigates through the year.
