New-Home Sales Get Early Start on Spring, Soar to 2007 Levels
February 27, 2020
Sales of newly built single-family homes saw a large jump in January, as warm weather in many parts of the U.S. prompted an early start to the homebuying season, says Jing Fu, director of forecasting and analysis at the National Association of Home Builders.
New-home sales rose 7.9% in January to a seasonally adjusted annual rate of 764,000 units, the U.S. Commerce Department reported Wednesday. Sales are 18.6% higher than a year ago, and are at the highest monthly sales pace since July 2007.
While sales are increasing, inventories remain low. New-home inventories are 6.6% lower than a year ago and are at the lowest supply since 2017. “The months’ supply has fallen to 5.1 [months], indicating additional housing inventory is needed,” Fu says. That echoes the calls of many economists from the real estate industry—including the National Association of REALTORS®—who have been calling on home builders to ramp up residential construction to meet growing demand among home buyers.
“Demand conditions in January continued to be favorable for new-home sales,” economists Ben Ayers and Daniel Vielhaber wrote in a research note on Monday. “Unemployment and mortgage rates continue to be very low, household formations continue to run hot, while the inventory of existing houses on the market is extremely limited, pushing more home buyers into the market for new homes.”
The median sales price was $348,200 in January. A year ago, it was $305,400.
Across the country, in January new-home sales rose the most in the Midwest, where sales were 30.3% higher month over month. Sales also saw a 23.5% increase in the West and a 4.8% jump in the Northeast. Sales were down by 4.4% in the South.
Updated: July 02, 2020