(March 19): Sales of new US homes fell by more than expected in January to the lowest since 2022, reflecting a pullback in buyer demand across the country.
New single-family home sales decreased 17.6% from December to an annualised 587,000 pace, according to government figures out on Thursday. Sales were weaker than all estimates in a Bloomberg survey of economists.
The figures were likely impacted by severe winter weather in much of the country. While builders continue to offer incentives and price cuts, ongoing affordability concerns are still keeping many prospective buyers on the sidelines.
Sales fell nearly 45% in the Northeast and about 34% in the Midwest. The South, the nation’s largest market, dropped to the lowest since October 2024. Sales also plunged in the West.
Easing mortgage rates offered some support to the housing market at the start of the year, but the war in Iran has since muddied the picture. The conflict risks putting additional pressure on inflation and could lead borrowing costs to remain elevated for longer. In the past two weeks, mortgage rates have jumped by the most in nearly a year.
Housing affordability has been a key issue ahead of November’s midterm election. President Donald Trump has taken several steps to boost home ownership, including signing two executive orders last week aimed at facilitating access to mortgage credit and easing environmental rules to speed up development projects.
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The median sales price of a new home decreased 6.8% in January from a year earlier to US$400,500, the report showed. New-home inventory fell 4%, though remains historically elevated. Lackluster demand combined with bloated inventories could temper new housing construction in the coming months.
Separate data out earlier this month showed pending sales of existing homes unexpectedly rose in February as buyers took advantage of lower mortgage rates and slower price growth. New residential construction of single-family homes fell at the start of the year.
New-home sales are seen as a more timely measurement than purchases of existing homes, which are calculated when contracts close. However, the data are volatile on a monthly basis. The government report showed 90% confidence that the change in new-home sales ranged from a 4.3% drop to a 30.9% decline.
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