U.S. new home sales unexpectedly plummeted to the lowest level since 2022 in January, with home prices dropping 6.8% year-on-year
U.S. new home sales in January fell to the lowest point since 2022, reflecting a decline in demand from homebuyers across the country. Sales of new single-family homes in January decreased by 17.6% compared to December, at a seasonally adjusted annual rate of 587,000 units. The median sales price of new homes in January dropped by 6.8% year-on-year to $400,500. Sales in the Northeast region fell by nearly 45%, while the Midwest saw a decline of about 34%
U.S. January new home sales fell more than expected, reaching the lowest level since 2022, reflecting a decline in homebuying demand nationwide.
According to data released by the U.S. government on Thursday, sales of newly built single-family homes fell 17.6% from December, marking the largest month-over-month decline since July 2013, far exceeding the expected month-over-month drop of 2.7%, with an annualized rate of 587,000 units, the lowest since 2022. This data fell short of all media expectations from economists' surveys.
These figures may have been influenced by widespread severe cold weather across the U.S. Despite developers continuing to offer incentives and price reductions, affordability issues have kept many potential homebuyers on the sidelines.
Regionally, sales in the Northeast fell nearly 45%, while the Midwest saw a decline of about 34%. The South, as the largest market in the U.S., experienced sales dropping to the lowest level since October 2024. The West also saw a significant decline in sales.
At the beginning of this year, falling mortgage rates provided some support to the real estate market, but the subsequent Iran war has made the outlook more uncertain. The conflict may increase inflationary pressures and keep borrowing costs elevated for a longer period. Over the past two weeks, mortgage rates have seen the largest increase in nearly a year.
Housing affordability has become a key issue ahead of the midterm elections in November. U.S. President Trump has taken several measures to promote homeownership, including signing two executive orders last week aimed at improving access to mortgage credit and easing environmental regulations to expedite development projects.
The report shows that the median price of new homes fell 6.8% year-over-year in January, to $400,500, the lowest level since 2024.
New home inventory decreased by 4%, but remains at historically high levels. Weak demand combined with high inventory may suppress new home construction in the coming months.
Commentary stated: "The decline in new home sales in January far exceeded expectations. Although mortgage rates have fallen, the cold weather that month may have limited potential buyers' home viewing activities, a situation that continues into February. The future outlook may become quite bleak, as mortgage rates have surged significantly since the outbreak of the Iran war."
Another report released earlier this month showed that as buyers took advantage of lower mortgage rates and slower home price growth, the number of pending home sales unexpectedly rose in February. Meanwhile, the number of new single-family home starts has declined.
Compared to existing home sales, which are calculated at the time of contract signing, new home sales are considered a more timely indicator. However, this data can be quite volatile month-to-month
