New Home Sales Dip in December, But Inventory Reduction Offers Hope for Builders
Sales of new single-family houses declined in December, yet a concurrent reduction in housing inventory suggests potential for renewed construction activity, according to recent data from the U.S. Census Bureau and the Department of Housing and Urban Development.
December Sales Figures and Revisions
New home sales decreased 1.7% to a seasonally adjusted annual rate of 745,000 units in December. However, November’s sales were revised upward to a rate of 758,000 units from an initial reading of 656,000 units in October . The data release was delayed due to the government shutdown last year.
New home sales, while a smaller segment of the overall housing market, are known for their month-to-month volatility as they are recorded at contract signing . Despite the December dip, sales increased 3.8% year-over-year.
Inventory Levels and Days on Market
Total new housing inventory decreased to 472,000 units in December, down from 485,000 units in November. Notably, the inventory of homes under construction reached its lowest level in nearly four and a half years .
At December’s sales pace, it would take 7.6 months to sell the current supply of new houses, a slight decrease from 7.7 months in November .
Price Trends and Mortgage Rates
The median new house price rose 4.2% to $414,400 in December compared to the previous year .
Concurrently, mortgage rates have shown a downward trend. The average rate for a 30-year fixed-rate mortgage fell to 6.01% this week, the lowest level since September 2022, decreasing from 6.09% the previous week, according to Freddie Mac .
Looking Ahead
The combination of declining inventory and falling mortgage rates could provide a boost to the housing market in the coming months, potentially encouraging builders to initiate new projects and increasing housing supply. The Census Bureau provides ongoing data and analysis on new residential sales, offering valuable insights into the evolving dynamics of the housing sector .