In February, the sales of newly built homes declined, while previously owned homes saw a significant increase. According to data from the U.S. Census Bureau, if current sales rates continue, only 662,000 new homes will be sold this year, below economists’ expectations of 675,000 annually. Despite a slight decrease from January, the annual rate of new home sales in February was still 5.9% higher than the previous year.
On the other hand, existing home sales saw an increase of 9.5% in February due to lower interest rates easing market constraints. However, high mortgage rates have caused many homeowners to be hesitant about selling and buying new homes, leading to fewer homes for sale in the market. To unlock the stagnant market, many economists suggest building more new homes.
Looking ahead to 2024, experts predict that new home sales will increase due to factors such as lower mortgage rates, increased supply and a shortage of existing homes for sale. Nancy Vanden Houten of Oxford Economics believes that these factors will drive sales of new homes higher next year.
Overall, despite a slight decline in February compared to January 2023, the annual rate of new home sales remained slightly above the previous year’s rate. While there is room for improvement in terms of increasing supply and driving down mortgage rates further to stimulate demand for new homes; it is important to note that existing home sales also played a significant role in shaping overall housing market trends this month.
Builders and policymakers may need to find innovative ways to encourage more people to buy or build new homes if they want to see sustained growth in this sector over time. This could include offering incentives or tax breaks for first-time buyers or developers who construct affordable housing units.
As we move forward into 2024 and beyond, it will be interesting to see how these trends evolve and whether or not they continue on their current trajectory or change course entirely due
