Falling mortgage rates gave new home sales a boost in November compared with October, but they remained down from a year ago.
New home sales in November were at a seasonally adjusted annual rate of 640,000, an increase of 5.8% compared with October but down 15.3% compared with November 2021, according to estimates from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Regionally, and year-over-year, new home sales fell 3.6% in the Northeast, 22.3% in the Midwest, 13.1% in the South and 19.3% in the West.
The median sales price of a new home sold in November was $471,200. The average sales price was $543,600.
As of the end of November, there were about 461,000 new homes available for sale in the U.S., about an 8.6-month supply at the current sales rate.
“Sales of new single-family homes in November exceeded consensus expectations,” says Odesa Kushi, deputy chief economist for First American, in a statement. “It’s important to keep in mind that the new-home sales report does not account for cancellations of sales contracts, which have been rising, so the results may be an overestimation of sales.”
“Lower mortgage rates, builder incentives, and a lack of existing-home inventory likely boosted sales in November,” Kushi says. “According to NAHB, 62 percent of builders are using incentives to bolster sales, including providing mortgage rate buy-downs, paying points for buyers, and offering price reductions.”
Home builders will continue to complete the homes they have started, which help keep some supply in the pipeline.
“Only 64,000 of the new-home inventory is completed and ready to occupy,” Kushi says. “This count has been increasing in recent months and is up 88 percent compared with a year ago. Homes under construction accounts for 63 percent of the inventory.”
“Declining mortgage rates during the second half of November, combined with builder sales incentives, lifted the pace of new home sales for the month,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB), in a statement. “However, due to higher construction costs and ongoing supply-chain issues, the median price of a newly-built single-family home in November was $471,200, 9.5 percent higher than a year ago.”
“The impact of higher construction costs has made building entry-level homes particularly difficult, and this is where we see the greatest amount of pricing out for the housing market,” adds Robert Dietz, chief economist for NAHB. “In November 2021, 13 percent of new home sales were priced below $300,000. That share has now fallen to 7 percent.”
Photo: Dillon Kyde