Mortgage rates and home prices fell in January, and home builders used sales incentives to promote new home sales last month.
According to freshly released statistics from the U.S. Census Bureau, sales of newly built single-family houses jumped 7.2% in January to a seasonally adjusted annual rate of 670,000 from an upwardly revised figure in December. Department of Housing and Urban Development, as well as the U.S. The Census Bureau.
“The latest HMI survey shows 57% of builders are using incentives to bolster sales, including providing mortgage rate buy-downs, paying points for buyers and offering price reductions,” Alicia Huey, NAHB chairman and custom home builder and developer from Birmingham, Ala. “Buyer incentives, along with stabilizing mortgage rates during the month of January, increased the pace of new home sales for the month. However, in a sign of current market weakness, sales are down 19.4% compared to a year ago.”
“Even though new home sales edged higher in January, the recent uptick in mortgage rates would imply continued weakness in the coming months,” NAHB associate vice president for forecasting and analysis Danushka Nanayakkara-Skillington stated. “In terms of affordability, the median price is down for the third straight month and is down compared to a year ago.”
When a sales contract is signed or a deposit is accepted, a new home is sold. The house can be in any stage of construction: unfinished, under construction, or finished. In addition to compensating for seasonal impacts, the January reading of 670,000 units represents the number of homes that would sell if the current pace was maintained for the following year.
The supply of new single-family homes fell in January but remained high at 7.9 months. A measure that is close to a six-month supply is deemed balanced. Finished, ready-to-occupy inventory increased 115% year on year to 73,000 in January, up from 34,000 the previous year. Yet, this inventory type accounts for only 17% of overall inventory.
After peaking in October at $496,800, the median new house sale price fell for the third month in a row. The median price in January was $427,500, an 8.2% decrease from December.
On a monthly basis, new house sales declined in three regions: the Northeast (19.4%), the Midwest (6.9%), and the West (7.3%). In the South, new home sales increased 17.1%.
