Persistently high mortgage rates hovering near 7%, coupled with equally high home prices, have created an affordability crisis that many prospective homebuyers and homesellers are intimately familiar with. These market forces have created somewhat sticky market conditions for existing-home sales, in contrast with new-home sales, which new data shows are on the rise.
The latest figures released jointly by the U.S. Census Bureau and Housing and Urban Development Monday found that sales of new single-family homes in December 2024 saw a seasonally adjusted annual rate of 698,000. This is a 3.6% increase from a November rate of 674,000, and a 6.7% year-over-year increase from a December 2023 estimated 654,000.
The findings also showed that 683,000 new units were sold for the year 2024, which was a 2.5% increase from the 2023 figure of 666,000.
Additionally, the report found that the median sales price of a new home sold in December 2024 was $427,000, while the average home sale price for the same timeframe was $513,600.
Bright MLS Chief Economist Dr. Lisa Sturtevant reiterated the data and provided context for the numbers against the backdrop of existing-home sales.
“The U.S. Census Bureau reported this morning that new-home sales in December 2024 were up 6.7% compared to the year prior. New-home sales rose 3.6% from November. Today’s report on new-home sales is in contrast to the existing-home sales data, which showed transactions in 2024 were at a near-30 year low. Overall, an estimated 683,000 new homes were sold in 2024, which is 2.5% higher than 2023 and is the highest level since 2021.”
Sturtevant went on to explain that although many prospective homebuyers may have wanted to purchase an existing home, a lack of inventory impacted their ability to do so. This, coupled with concessions in rate buydowns from builders, may have enticed homebuyers to seek new builds over existing ones.
“There are two main reasons the new-home market was stronger in 2024,” added Sturtevant. “First, in many markets, there was simply more new-home inventory, and some buyers who might have wanted to purchase an existing home were instead looking at new construction. Second, homebuilders were able to offer prospective buyers concessions, including rate buydowns, to entice them to new home communities.”
She concluded her remarks by saying that the scale could tip in the other direction for existing-home sales in the upcoming year.
“The balance between the new- and existing-home markets could change in 2025. The available supply of existing homes for sale is increasing as more current homeowners are deciding to sell. And while mortgage rates remain elevated and builders will still promote rate buydowns, those concessions get more difficult as profit margins narrow.”
Carl Harris, chairman of the National Association of Home Builders (NAHB), also noted that the regulatory environment may be more favorable for new homebuilders looking forward.
“New-home sales ended 2024 higher on ongoing limited resale inventory conditions. Builders are cautiously optimistic about the building market for 2025 given a post-election policy reset that seeks to eliminate unnecessary regulations.”
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