Residential Real Estate News
New Home Sales Hit 2 Year Low in America
The National Association of Home Builders (NAHB) reports that rising mortgage rates and persistent affordability challenges kept many potential homebuyers on the sidelines in October 2024. Sales of newly built single-family homes dropped 17.3% to a seasonally adjusted annual rate of 610,000 units, according to data from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau. Compared to the same month last year, this pace is down 9.4%, although year-to-date sales remain up by 2.1%.
"The decline in new home sales underscores the challenges faced by prospective buyers dealing with tighter budgets and higher borrowing costs," said Carl Harris, NAHB Chairman. "It also reflects slower buyer activity amid broader economic uncertainty."
Danushka Nanayakkara-Skillington, NAHB's Assistant Vice President for Forecasting and Analysis, noted that "higher mortgage rates, which rose 60 basis points in October according to Freddie Mac, combined with elevated home prices, continue to exacerbate affordability challenges. Despite these hurdles, including increased material costs for builders, new construction plays a critical role in meeting demand, particularly in markets with low existing home inventory."
A new home sale is recorded when a sales contract is signed or a deposit is accepted, regardless of the construction stage. The October figure of 610,000 units represents the annualized number of homes that would sell if this pace continued over the next year.
The inventory of new single-family homes in October remained high at 481,000 units, an 8.8% increase from a year earlier, representing a 9.5-month supply at the current sales pace. Ready-to-occupy inventory grew significantly, rising 52.6% year-over-year to 116,000 units, though it still accounts for only 24% of total inventory.
The median price for a new home in October rose 2.5% to $437,300, a 4.7% increase compared to a year ago.
Regionally, year-over-year new home sales trends were mixed. Sales rose by 35.3% in the Northeast and 15.9% in the Midwest but fell 19.7% in the South and 1.3% in the West.
