New home sales declined sharply last month, dropping a significant 17.3% in October, from a September increase of 4.1%, likely due, analysts say, to a rebound in mortgage rates and increased competition from the existing home market.
The latest numbers released jointly Thursday by the U.S. Census Bureau and the Department of Housing and Urban Development, show sales of new single-family houses in October 2024 plunged to a seasonally adjusted annual rate of 610,000, down from the September rate of 738,000–the lowest level since December of 2022. According to the report, this represents a year-over-year decline from 673,000 in October 2023—a 9.4% falloff for this timeframe.
“Some of the dip in new home sales in October is partially explained by political uncertainty,” said Bright MLS Chief Economist Dr. Lisa Sturtevant. “Following the election, homebuilders appear to be more confident as the homebuilder confidence index has risen for two months in a row.”
She added, “However, there are some headwinds to new home sales in the months ahead. Although mortgage rates will come down, rates are not expected to fall by as much as expected. At the same time, the inventory of existing homes for sale has been increasing. When existing home inventory was at a record low, some buyers had no other option but a new home. Now, however, buyers have more options. As a result, new home sales could continue to be sluggish through the rest of 2024.”
CoreLogic Senior Principal Economist Molly Boesel added, “New Home Sales are hampered by affordability and will remain weak until mortgage rates drop. However, some areas of higher-than-average new home sales remain in places that are seeing an influx of professionals, such as DFW and Houston.”
“If the incoming administration opens up federal lands to homebuilders, in an effort to kickstart the housing market, new home sales will likely start trending upward,” Boesel added.
Additional data from the report: The median sales price for the new units sold was $437,300 while the average sale price reported for October was $545,800.
For the full report, click here.
