New home sales in December were at a seasonally adjusted annual rate of about 698,000, an increase of 3.6% compared with November and an increase of 6.7% compared with December 2023, according to the U.S. Census Bureau.
An estimated 683,000 new homes were sold in 2024, an increase of 2.5% compared with 2023.
The median sales price of a new home sold in December was $427,000. The average sales price was $513,600.
As of the end of the month, there were about 494,000 new homes available for sale in the U.S. – about an 8.5-month supply at the current sales rate.
“New home sales are now 16 percent higher than the pre-pandemic average, but we are currently still only building about 10 per 1,000 households, which is about the same as in 1991,” says Mark Fleming, chief economist for First American, in a statement. “New construction has struggled to keep up with demand. Rising construction costs, zoning restrictions, and a shortage of labor have all contributed to the inability to build enough homes.”
“To put this pace in perspective, in the late 1930s and early 1940s, we were building between 500,000 and 700,000 units a year, which equated to 15-20 units per 1,000 households,” Fleming says. “Post-World War II that ramped up to over a million units, peaking at 1.9 million units per year in 1950, or 44 units per 1,000 households. We have never built at this rate since.”
“The key to fixing the affordability crisis is to increase the amount of construction in this country to keep up with new demand every year as well as make up for the under-building that has now been occurring for decades,” he adds.
The main reason new home sales continue to rise is that inventory of existing-homes continues to hover at near-record lows.
“New home sales ended 2024 higher on ongoing limited resale inventory conditions,” says Carl Harris, chairman of the National Association of Home Builders (NAHB), in a statement. “Builders are cautiously optimistic about the building market for 2025 given a post-election policy reset that seeks to eliminate unnecessary regulations.”
“New home sales ended the year 2.5 percent higher over the 2023 total,” adds Robert Dietz, chief economist for NAHB. “NAHB is forecasting a slight gain for sales in 2025 given ongoing solid macroeconomic conditions, particularly for the labor market.”
Photo: Todd Kent