New-Home Sales Increase Again in January, Builder Confidence Up
As we head into the spring homebuying season, builder sentiment continues to improve. And there's good reason: A combination of easing mortgage rates and continuing demand saw new-home sales increase again in January, with data for the month showing a seasonally adjusted annual rate (SAAR) of 661,000 new single family-home sales nationwide. That's 1.5% higher than the revised December rate (651,000) and up 1.8% from January 2023, according to the U.S. Census Bureau, as reported by tech real-estate marketplace Zillow. The median sales price of new homes in January was $420,700.
Why it matters: Despite the recent uptick in the supply of existing homes coming onto the for-sale market, resale inventory remains nearly 40% below its pre-pandemic level. New construction is helping to fill that gap. As a result, sales of newly built homes increased in the past year while existing-home sales fell. The decline in mortgage rates in December coupled with a steady supply of newly built homes continue to propel new home sales higher.
Builder sentiment continues to improve and the share of builders offering incentives has fallen, according to the National Association of Home Builders. Unexpected population growth and higher real incomes are likely to support housing demand. Despite the increase in mortgage rates since January, new home sales could keep moving higher.