Sales of new homes in the United States saw a slight increase in January, as builders and buyers took advantage of lower mortgage rates at the beginning of the year. Government data released on Monday showed that purchases of new single-family homes rose by 1.5% to reach an annual pace of 661,000, following downward revisions to the figures for the previous three months. Economists surveyed by Bloomberg had anticipated a higher rate of 684,000.
The housing sector kicked off 2024 on a positive note, with a decline in mortgage rates boosting homebuilder sentiment and providing some traction for the resale market as well. However, as the Federal Reserve shows no urgency to lower borrowing costs, rates have begun to climb again, potentially dampening any momentum in the housing market.
In January, the median sales price of a new home decreased to $420,700 compared to a year ago, marking the fifth consecutive decline, as more homes became available for sale. The supply of new homes increased to 456,000 from the previous month, reaching the highest level in over a year, according to the report issued by the Census Bureau and Department of Housing and Urban Development.
Sales experienced notable growth in the Northeast and West regions, while the Midwest saw a more modest increase, and transactions declined in the South.
New-home sales are considered a more timely indicator compared to purchases of previously-owned homes, which are calculated upon contract closures. Sales of existing homes saw their largest increase in nearly a year in January.
However, it’s important to note that these data can be volatile. The government report indicated a 90% confidence level that the change in new-home sales ranged from an 18.4% decline to a 21.4% gain.
In summary, while new-home sales in the US saw a modest uptick in January, the housing market continues to navigate fluctuating mortgage rates and supply dynamics, with regional variations influencing overall sales trends.
