New-Home Sales Outpace Existing Home Sales in January

As existing home sales inched forward in January by 0.6%, new-home sales grew at a stronger rate of 4.3%, according to data from the Census Bureau and U.S. Department of Housing and Urban Development. The National Association of Home Builders says the gap between sales and construction starts hit a historic margin at the end of the summer, necessitating a slowdown of sales at the end of 2020. Compared to January 2020, home sales are 19.3% higher, thanks to solid demand and low mortgage rates.

Looking back to the spring, the April data (570,000 annualized pace) marks the low point of sales for the 2020 recession. The April rate was 26% lower than the prior peak, pre-recession rate set in January. Sales then mounted a historic surge from April until July, outpacing gains in actual construction.

Sales-adjusted inventory levels remained lean in January, coming in at a 4 months’ supply. Inventory by count increased in January, but is 5.5% lower than a year ago. Moreover, the count of new homes offered for sale that have not started construction has increased 45% over the last year, rising from 56,000 to 81,000. The count of completed, ready-to-occupy homes stood at just 42,000 in January.

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