US New Home Sales Fall in December; Inventory Declines
New home sales in the U.S. experienced a minor decline in December, yet builders made notable strides in reducing their unsold inventory. While sales of new single-family homes dipped, the reduction in inventory may pave the way for more new housing projects in the coming months.
Key Highlights
– Sales Decline: December saw a 1.7% drop in new home sales to a seasonally adjusted annual rate of 745,000 units, as reported by the Commerce Department’s Census Bureau.
– Previous Month Comparison: Sales were up from November’s rate of 758,000 units, showing a rise from 656,000 in October. The delay in data release was due to last year’s government shutdown.
– Year-over-Year Growth: On a year-over-year basis, December’s new home sales were up by 3.8%.
– Inventory Reduction: New housing inventory decreased to 472,000 units in December, down from 485,000 in November. This marks a significant reduction, with the inventory of homes currently under construction being the lowest in nearly four and a half years.
– Market Supply: At the current sales pace, it will take 7.6 months to deplete the existing supply of new houses, a slight improvement from 7.7 months in November.
– Price Trends: The median price of new homes rose by 4.2% year-over-year, reaching $414,400 in December.
Factors Impacting New Home Sales
The housing market may receive a boost from declining mortgage rates. The average rate on the popular 30-year fixed-rate mortgage dropped to 6.01% this week, the lowest since September 2022, compared to 6.09% the previous week according to data from Freddie Mac.
In conclusion, while new home sales in the U.S. fell in December, the commendable decline in inventory could lead to increased opportunities for builders. With favorable mortgage rates, the housing market remains poised for potential growth, making it an area to watch as we move into the new year.