While new house sales increased slightly in December, rising mortgage rates and greater building costs continue to limit housing affordability and dampen consumer desire.
According to freshly released statistics from the U.S. Census Bureau, sales of newly built single-family houses increased 2.3% in December to 616,000 seasonally adjusted annual rate from a downwardly revised number in November. Department of Housing and Urban Development, as well as the U.S. The Census Bureau. In 2022, new home sales were down 16.4% from the previous year.
“Builder incentives and declining mortgage rates during the month of December helped push new home sales up for the month,” said Jerry Konter, head of the National Association of Home Builders (NAHB) and a Savannah, Georgia-based home builder and developer. “However, because of higher construction costs and decreasing affordability, sales are down more than 25% compared to a year ago.”
“In a further sign of decreasing housing affordability, even though the median home price is down for the second straight month, it is still up 7.8% compared to last year,” NAHB associate vice president for forecasting and analysis Danushka Nanayakkara-Skillington stated. “Elevated inventories are another concerning sign of a soft market.”
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 December estimate of 616,000 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 remained high at 9 months (of varying stages of construction). A measure that is close to a six-month supply is deemed balanced. The number of homes for sale, 461,000, is up 18.5% from last year.
A year ago, there were only 33,000 completed, ready-to-move-in homes for sale. By December 2022, that figure had risen 115% to 71,000, showing weakening demand and greater standing inventory as a result of reduced sales. However, completed, ready to occupy inventory accounts for only 15% of overall inventory.
The typical new house sale price in December was $442,100, a 3.7% decrease from November but a 7.8% increase over last year due to higher building expenses.
Regionally, new house sales declined in all four areas year over year, down 8.2% in the Northeast, 22.1% in the Midwest, 13.0% in the South, and 23.5% in the West.
