Stable mortgage rates at the beginning of 2024 helped new home sales to increase in January. Sales of newly built, single-family homes in January increased 1.5% to a 661,000 seasonally adjusted annual rate from a downwardly revised reading in December, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in January is up 1.8% from a year earlier.
A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the January reading of 661,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in January remained elevated at a level of 456,000, up 3.9% compared to a year earlier. This represents an 8.3 months’ supply at the current building pace. A measure near a six months’ supply is considered balanced.
A year ago, there were 72,000 completed, ready-to-occupy homes available for sale (not seasonally adjusted). By the end of January 2024, that number increased 19.4% to 86,000. However, completed, ready-to-occupy inventory remains just 19% of total inventory, while homes under construction account for 58% of the inventory. The remaining 23% of new homes sold in January were homes that had not started construction when the sales contract was signed.
The median new home sale price in January was $420,700, up 1.8% from December, but down 2.6% compared to a year ago. In terms of affordability, the share of entry-level homes priced below $300,000 has been steadily falling in recent years. Only 15% of the homes were priced in this entry-level affordable range, while 34% of the homes were priced above $500,000. Most of the homes were priced between $300,000-$500,000.
Regionally, on a year-over-year basis, new home sales are up 4.9% in the Northeast and are up 57.0% in the West but down 4.1% in the Midwest and down 13.5% in the South.
