New home sales in December were at a seasonally adjusted annual rate of 664,000, an increase of 8.0% compared with November and an increase of 4.4% compared with December 2022, according to estimates from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Lower mortgage rates in December – coupled with persistently low inventory of existing-homes – helped drive the increase, which follows a 12% month-over-month decrease in November.
An estimated 668,000 new homes were sold in 2023 – an increase of 4.2% compared with 2022, according to the agencies.
The median sales price of a new home sold in December was $413,200.
The average sales price was $487,300.
As of the end of the month there were about 453,000 new homes available for sale in the U.S. – about an 8.2-month supply at the current sales rate.
“We are likely to see a soft but steady rebound in home sales which reflect pent up demand and optimism that has built over expectations of lower mortgage rates,” says Selma Hepp, chief economist for CoreLogic, in a statement. “Builder surveys also show cautious optimism as we enter the new year. Permits are also up which will provide some relief in supply and will help keep home sales going if interest rates continue their downward trend throughout 2024, as expected.
“However, home affordability will not improve greatly this year as prices continue to rise and mortgage rate decline remains marginal,” she adds.
“The solid new home sales rate in December was fueled by a lack of existing inventory in the resale market and declining interest rates,” says Alicia Huey, chairman of the National Association of Home Builders (NAHB), in a statement. “The rise in sales also coincides with our latest builder surveys, which show a marked increase in future sales expectations because of falling mortgage rates.”
“New home sales ended the year on a high note thanks largely to falling interest rates and a decline in existing home sales,” adds Danushka Nanayakkara-Skillington, assistant vice president for forecasting and analysis for NAHB. “And while moderating interest rates are a promising sign for new home sales in the year ahead, long-term issues such as a shortage of buildable lots, a lack of skilled labor and excessive regulations will continue to pose challenges for builders.”
