Last week, National Association of Realtors® told us that existing-home sales for December and all of 2023 tumbled to new lows. On Thursday, though, the Census Bureau’s preliminary report for December showed new home sales jumped 8% from November and grew 4% from 2022 to 2023. To be sure, new home sales are just a fraction of existing home sales in the U.S., and new homes sales can fluctuate significantly from month to month. Still, the 668,000 new homes purchased in 2023 ends a two-year decline. It also talks to two key concerns that have bogged down the market struggling with higher mortgage rates: too few buyers and too few homes for sale. NAR Chief Economist Lawrence Yun in December predicted an upswing in the housing market. Yun and the NAR aren’t expecting the housing market to hit the highs it did in 2020 with interest rates at multi-decade lows. They do expect the market to fall a bit short of 2022’s sales at 4.71 million homes. “The demand for housing will recover from falling mortgage rates and rising income,” Yun said. He said he expects housing inventory to jump 30% because higher mortgage rates caused home owners to delay selling. Another encouraging sign for buyers in Thursday’s new home sales report: an overall decline in sale prices in 2023. The average price of a new home fell 5.3% to $511,100 while the median sales price fell 6.6% to $427,400. Mortgage rates contributed the most to new home buyers’ monthly mortgage payments in recent months. But, the median sales price for all types of home have crept up by thousands of dollars each year since the pandemic. The NAR found this fall that U.S. homes hadn’t been this unaffordable since 30-year mortgage rates hovered around 14% in 1984.
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