In November, US new home sales exhibited a slower growth trajectory than analysts had predicted, with a notable decline in median prices across the nation, based on newly released government statistics. The latest figures reveal that single-family home sales escalated by 5.9% on a month-over-month basis, arriving at a seasonally adjusted annual rate of 664,000 units, up from an upwardly revised figure of 627,000 units in October, as reported by the Census Bureau and the Department of Housing and Urban Development (HUD).
Analysts had forecasted sales to reach approximately 670,000 units, indicating a slight shortfall from projections. Examining regional sales trends, the Midwest experienced a robust surge of about 17% in sales compared to the previous month, while the South followed with an impressive jump of around 14%.
However, sales in the West witnessed a decrease of 7.5%, and the Northeast faced a staggering drop of 41%. On an annual basis, new home sales reflected an increase of 8.7%, driven predominantly by the positive performances in the Midwest and South regions. Nancy Vanden Houten, a Lead Economist at Oxford Economics, commented on the situation, noting that the recovery in the South, which had previously been impacted by hurricanes that affected sales in October, fell short of expectations.
Vanden Houten also expressed that sales are likely to be below Oxford’s fourth-quarter projections, though this could have a negligible effect on the country's gross domestic product forecast. Additionally, the median price for new homes sold experienced a drop to $402,600 in November, compared to $425,600 in October and $429,600 in the previous November, highlighting a cooling trend in the housing market.
Furthermore, the supply of new homes available for sale decreased to a rate of 8.9 months from a prior 9.2 months. The seasonally adjusted estimate of new houses for sale at the conclusion of November rose by 2.1% on a month-over-month basis and saw an annual increase of 8.9%, totaling 490,000 units.
Looking ahead, Oxford anticipates a 'small improvement' in new home sales in 2025, attributing this optimism to a projected modest decline in mortgage rates coupled with a consistent economic backdrop and supportive job market conditions. Vanden Houten also noted that incentives from homebuilders are expected to sustain new home sales, particularly if mortgage rates remain stubbornly high.
Reports indicate that around 60% of builders employed incentives in December, with 31% of them opting to reduce prices, according to the National Association of Home Builders and Wells Fargo..