More new single-family homes were sold in December on both a monthly and annual basis, with sales for the entire 2024 up compared to the previous year, according to data from the U.S. Census Bureau.
“Sales of new single-family houses in December 2024 were at a seasonally adjusted annual rate of 698,000,” said a Jan. 27 statement from the agency. This is 3.6 percent higher than the previous month and up 6.7 percent from December 2023. On a monthly basis, home sales were up in the Northeast and the West, declining in the Midwest and South. All four regions posted gains annually.
Overall, an estimated 683,000 new homes were sold last year, up 2.5 percent compared to homes sold in 2023.
This was also the highest level since 2021, Lisa Sturtevant, chief economist at real estate data company Bright MLS, wrote in a Jan. 27 commentary. She said there were two key reasons why the market for new homes was stronger in 2024.
“First, 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. Second, home builders were able to offer prospective buyers concessions, including rate buydowns, to entice them to new home communities.”
Sturtevant says the balance between new and existing home markets could change this year.
“The available supply of existing homes for sale is increasing as more current homeowners are deciding to sell. And while mortgage rates remain elevated and builders will still promote rate buydowns, those concessions get more difficult as profit margins narrow.”
The National Association of Home Builders (NAHB) attributed the jump in new home sales in December to a limited amount of existing home inventory and “solid demand” for fresh properties. The jump in new home sales took place even as buyers faced “housing affordability challenges,” it said in a Jan. 27 statement.
According to NAHB Chief Economist Robert Dietz, the association is forecasting a “slight gain” for new home sales this year, citing “ongoing solid macroeconomic conditions,” especially the labor market.
Data showed that at the end of December, there were 494,000 new homes in inventory for sale, enough supply for 8.5 months at the current pace of sales.
Sales Pace and Mortgage Rates
While new home sales rose last year, the overall pace of home sales has now slowed down, according to a Jan. 30 report by real estate brokerage Redfin.The typical home now takes two months to sell, the slowest pace in five years, it said. Homes are also sitting on the market longer. For the four weeks ending Jan. 26, there were 5.2 months of supply on the market, the highest since February 2019.
The company blamed the slow pace on high prices and mortgage rates, saying that home prices are up 4.8 percent on an annual basis while rates are hovering close to 7 percent. The median monthly housing payment is $2,753, the highest level since April.
“Prospective buyers have been cautious because they’ve seen homes sitting on the market and they’ve heard interest rates and prices may drop. When the market isn’t competitive, some buyers think they should wait for costs to go down,” said Jordan Hammond, a Redfin Premier agent in Raleigh, N.C.
“Now it’s pretty clear that sellers aren’t slashing asking prices and mortgage rates aren’t plummeting, so mindsets are shifting. People are starting to believe that if they want or need to move, and they can afford to, they should do it.”
According to data from Freddie Mac, the average weekly rate for a 30-year fixed-rate mortgage was 6.95 percent for the week ending Jan. 30.
Rates had hit a bottom of 6.08 percent in late September but ballooned by almost a percentage point since then.
Freddie Mac chief economist Sam Khater said the rate has been hovering between 6 and 7 percent for most of the last two and a half years, a trend that continued in the recent week.
“Driven by these higher rates and a persistent supply shortage, affordability hurdles still exist for many homebuyers and a significant number of them remain on the sidelines.”
