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Friday, June 21, 2024

U.S. New Home Sales Rise, Below Expectations

In January, the U.S. housing market saw an increase in new single-family home sales, rising by only 1.5%. This growth fell short of expectations, with a consensus prediction of a 0.9% month-on-month increase, showing a deceleration from the 7.2% surge reported in previous periods. The Commerce Department’s Census Bureau highlighted this performance with a downturn in the South, driven by the ongoing shortage of pre-owned homes on the market.

Expectations vs. Reality

According to Reuters, economists had anticipated a more robust recovery, forecasting new home sales to reach a rate of 680,000 units. Several factors, including unusually cold weather across the country, likely deterred potential buyers and cut this optimism.

The Northeast and West experienced substantial growth, with sales increasing by 72.0% and 38.7%. The Midwest saw an increase of 7.7%. However, a 15.6% plummet in the South overshadowed these gains, marking the lowest sales level since September 2022.

Despite the month’s downturn, the demand for new homes remains strong, supported by a shortage of existing homes. 

The housing market’s trajectory faces uncertainty due to fluctuating mortgage rates. After a brief pause, rates are on the rise again, potentially cooling future sales. Yet, the overall outlook remains optimistic, with expectations of a downward trend in mortgage rates throughout the year. 

Pricing and Inventory Trends

The median price of a new home in January was $420,700, marking a 2.6% year-on-year decrease. This price adjustment shows a strategic shift among builders, who are gradually moving away from incentives like price reductions. The supply of new homes stood at 456,000 units at the end of January, indicating a stable market with an 8.3-month supply at the current sales pace. The composition of this inventory further highlights the market’s dynamics, with the majority of homes either under construction or yet to be built, pointing to sustained builder confidence in demand continuity.

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Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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