ARLINGTON, Va.—While new home sales rose 2.3% in December to 616,000 annualized units, sales were 26.6% lower than a year ago. In addition, November’s new home sales have been revised down 38,000 units.
“December capped off the smallest annual total of new homes sold since 2018,” said NAFCU Chief Economist and Vice President of Research Curt Long. “The market remained challenged throughout the year by high construction costs in conjunction with sky-high mortgage rates. However, there are signs that the market is beginning to turn around.”
Data from the National Association of Home Builders/Wells Fargo Housing Market Index showed builder confidence rose in January after 12 months of decline, and Redfin reported people requesting first tours in December were up 17 percentage points from November.
“Declining mortgage rates have brought some buyers off the sidelines. However, sellers remain reluctant to put their homes on the market, which continues to push demand to new construction,” Long noted. “NAFCU expects more slow, choppy growth in new home sales over the first half of 2023.”
Mixed Results by Region
New home sales were mixed across the U.S. in December, with the Midwest and South increasing 35.2% and 6.5%, respectively. Sales fell in the Northeast (-19.4%) and West (-15.3%).
Based on current month sales, there were nine months of supply in December, down 0.2 months from November. The number of unsold homes left on the market decreased 6,000 homes to 460,000. This represents a 17.7% increase from year-ago inventory levels.
The median new home price, non-seasonally adjusted, declined 3.7% in December to $442,100 – 7.8% higher than a year earlier, Long noted.
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