May 22, 2024

New Home Sales Dropped in November in Reaction to Higher Mortgage Rates

New home sales plummeted 12.2% in November compared with October but were up 1.4% compared with November 2022 to reach a seasonally adjusted annual rate of 590,000, 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 were up 4.9% in the Northeast, 3.6% in the Midwest, 4.4% in the South and 2.6% in the West.

The median sales price of a new home sold in November was $434,700. The average sales price was $488,900.

As of the end of the month, there were about 451,000 new homes available for sale in the U.S., about a 9.2-month supply at the current sales rate.

The month-over-month decrease was likely due to higher mortgage rates, which surged to nearly 8% in October. Rates have been back on the decline since mid-November.

Alicia Huey, chairman of the National Association of Home Builders (NAHB), forecasts that new homes sales will improve in 2024.

“New home sales activity should improve in the months ahead as mortgage interest rates settle in below a 7 percent rate,” Huey says in a statement. “Our latest builder survey turned positive in December, with builders indicating they expect a rise in future sales.”

“New home sales were weaker in November as mortgage interest rates likely reached a cycle peak at a 7.79% per Freddie Mac at the end of October,” adds Robert Dietz, chief economist for NAHB. “Mortgage rates have since moved lower, with Freddie Mac reporting a 30-year fixed-rate of 6.67 percent this past week.”

Photo: Todd Kent

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