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New Home Sales Drop in November, Predicted Rebound in 202412-26-23 | News

New Home Sales Drop in November, Predicted Rebound in 2024

Mortgage Rates Impact New Home Sales
by Staff

November's new home sales dipped due to elevated mortgage rates, but industry experts anticipate a rebound as rates stabilize.

In November, sales of newly built, single-family homes experienced a 12.2% decline, reaching a seasonally adjusted annual rate of 590,000, as reported by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This represents the lowest annual rate since November 2022, yet on a year-to-date basis, sales have increased by 3.9%, primarily driven by limited resale inventory.

Alicia Huey, Chairman of the National Association of Home Builders (NAHB), expressed optimism, stating, "New home sales activity should improve in the months ahead as mortgage interest rates settle in below a 7% rate." She highlighted the positive shift in the latest builder survey, where builders indicated an expectation of increased future sales.

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Chief Economist at NAHB, Robert Dietz, attributed the November weakness to the peak in mortgage interest rates, reaching 7.79% per Freddie Mac at the end of October. However, Dietz noted that rates have since decreased, with Freddie Mac reporting a 30-year fixed-rate of 6.67% in the past week.

The inventory of new single-family homes in November rose to the highest level since November 2022, marking a 16.5% increase from the previous month and a 9.2 months' supply at the current building pace. Despite this, the market demands a higher level of new construction inventory due to a persistent shortage of resale options.

The median sale price for new homes in November was $434,700, reflecting a 4.8% increase from October but a 5.9% decrease from the previous year. Regionally, year-to-date new home sales have seen positive trends in all four regions, with increases ranging from 2.6% in the West to 4.9% in the Northeast.

While November faced challenges, the expectation of stabilized mortgage rates in the upcoming months brings optimism for a resurgence in new home sales, reinforcing the resilience of the housing market.

https://www.nahb.org/news-and-economics/press-releases/2023/12/new-home-sales-down-in-november-but-should-improve-moving-forward

Filed Under: HOUSING, RESIDENTIAL, NAHB, LASN
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