US Home Sales Decline Over 10 Percent
An economist stated that while sales are anticipated to recover this month, the high mortgage rates will cap the potential for increased buying activity in 2025.
According to the latest data from the U.S. Census Bureau, the sales of new homes in the United States experienced a significant decline in January, falling by double digits on a monthly basis due to rising property prices and persistently high mortgage rates, which remain around the 7 percent mark.
The Bureau reported that the sales of new single-family homes decreased by 10.5 percent from December, with a seasonally adjusted annual rate of 657,000 units.
Simultaneously, the median sales price of new homes experienced a jump last month, rising from $415,000 in December 2024 to $446,300 in January.
Properties priced between $300,000 and $399,999 experienced the most significant decline in sales percentage last month, dropping from 29 percent of all new homes sold in December to 24 percent in January.
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Conversely, homes priced between $500,000 and $599,999 saw the highest increase, moving up by 4 percentage points from 12 percent in December to 16 percent in January.
He projected that sales would rebound in February but cautioned that buying activity this year will likely remain constrained by high mortgage rates.
As of the end of January, there were 495,000 new homes for sale, indicating a nine-month supply at the current sales pace.
“Shopping for homes is becoming easier with more months of supply on the market, prices are competitive with the resale market, and purchasing a new build provides greater customizability and a lower ownership cost than existing homes.”
Increased Interest in Smaller Homes
According to the National Association of Home Builders (NAHB), affordability concerns are driving home buyers toward smaller, more personalized homes.
The average size of homes buyers sought dropped to 2,150 square feet in 2024, down from 2,200 square feet the previous year, marking the lowest average size in 15 years.
Townhomes constituted a “record” 17 percent of the single-family market last year, a considerable increase from 10 percent in 2009.
Rose Quint, NAHB’s assistant vice president of survey research, attributed the growing interest in townhomes to their affordability amidst rising labor, material, and lot costs.
“In addition to constructing smaller homes, they are also addressing affordability concerns by providing sales incentives (64 percent) and reducing home prices (33 percent).”
“My recommendation for buyers: If you plan to purchase a home in the next six months, don’t wait for spring flowers to bloom,” advised Alison Williams, a Redfin Premier agent in Sacramento, California. “The market typically heats up as we approach spring.”
“Now is an optimal time to negotiate on home prices, save on closing costs, or request sellers to cover issues identified during inspections. There are bidding wars for relatively affordable homes, particularly those under $400,000, as well as upscale, fully renovated homes in desirable neighborhoods.”
