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More folks snapped up newly built homes last month thanks to lower mortgage rates.
The number of new homes for sale and sold in December jumped 8% compared with just one month earlier, according to a recent government report. Sales rose 4.4% year over year, according to the seasonally adjusted numbers in the U.S. Census Bureau and the U.S. Department of Housing and Urban Development report.
That was a reversal from November, when the number of sales fell 9% from October.
“This month’s new-home sales data suggests that eager buyers are ready and willing to jump into the housing market with each improvement in affordability,” Realtor.com® senior economic research analyst Hannah Jones wrote in her new-home sales commentary.
The rise in sales was largely due to mortgage rates coming down toward the end of last year. Rates fell from more than 7% in early November to the low 6% range by mid-December. The lack of existing homes for sale also led buyers to check out what builders have been busy putting up around the country.
The median price tag for new construction also fell to $413,200 in December, down 3% from November and 13.8% from a year earlier, according to the report.
That intoxicating combo of lower rates and prices made mortgage monthly payments more affordable for buyers, nudging many off the sidelines and into their new homes.
Monthly sales jumped the most in the Northeast, surging 32%. However, they were down 2.9% from December 2022.
Sales were up 10.6% in the South, up 9.2% in the Midwest, and down 3.4% in the West, compared with November.
“Sales rose a little, but they could boom this year if mortgage rates drop enough,” Robert Frick, corporate economist with Navy Federal Credit Union, said in a statement.”Builders are sitting on a huge supply of homes, 8.2 months worth, that they are trying to sell with incentives and lower prices, but it will take rates below 6% for them to really move.”
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