New home sales started 2023 on a positive note, rising 7.2% from December to a seasonally adjusted annual pace of 670,000 homes, according to published data US Census Bureau And this Department of Housing and Urban Development (HUD) on Friday. This marks the second consecutive month of growth and the strongest sales momentum since March 2022.
However, on a year-over-year basis, new home sales are still down 19.4%.
“January saw an increase in the number of people signing contracts to buy new homes. The increase in contract signing can be attributed to the decline in mortgage rates in January after rates rose in October and November.” Holden Lewis, NerdWalletthe home and mortgage specialist said in a statement. “Rates have jumped more than in January, which is acting as a drag on new home sales in the meantime.”
The increase in sales momentum resulted in only 439,000 new homes remaining on the market at the end of the month, representing 7.9 months of supply at the current sales pace, down from 8.7 months in December.
“The backlog of new construction homes continues to emerge on the market just in time for the spring shopping season,” Nicole Bachaud, Zillowsenior economist said in a statement. “Many home builders are offering incentives to buyers, sweetening the deal enough to bump up sales from the first month.”
As a result of incentives such as falling prices, the average new home sale fell from $465,600 in December to $427,000 in January, despite an increase in demand.
In general, sales were down on a month-over-month basis in the Northeast (25,000 homes), the Midwest (67,000 homes), and the West (127,000 homes), with the Northeast posting the largest decline of 19.4%.
The South (451,000 homes) was the only region to grow on a monthly basis, with an increase of 17.1%. On an annual basis, all regions registered a decline in annual sales momentum, with the West recording the biggest drop of 46.9%.
Looking ahead, experts are optimistic about the spring sales season for new construction.
“There is still a large proportion of new construction homes currently under construction, and when those homes come onto the market, especially over the next few months, we will see home buyers spring up – those who can afford the higher new construction price tags. — the options and opportunities to become a homeowner when there is more,” said Bachaud.
