New Home Sales Beat Expectations, but Supply and Demand Dynamics Remain the Same
2025.01.28 03:37
for December came in at an annualized rate of 698K (a gain of 24K for the month or +3.4%). This was better than the 669K that the street was expecting.
New home sales grew +6.7% in 2024, but remain about 32% below the October 2020 cycle high.
The monthly gains were led by the Northeast (+10K) and the West (+26K) while the Midwest (-3K) and the South (-9K) lagged behind.
There were 494K new homes for sale at the end of the month/year. Up about 10% for the year.
While the monthly supply of new homes came in at 8.5. It would take 8.5 months to sell the current supply of new homes on the market. This is a gain of 3.7% for the year.
The median sales price for new homes sold increased to $427K in December. A gain of 6.1% for December, but only up +2.1% for the full year in 2024. However, prices are up about 30% above the pre-COVID highs.
In summary, sales (or demand) up +6.7%, while supply is up +3.7%. When demand exceeds supply, prices typically rise (+2.1%). In 2024, new home prices failed to keep up with the rate of inflation.
The dynamics remain the same. Higher rates make housing less affordable and give buyers little incentive to sell their existing homes. While on the supply side, it also makes it more costly to build more homes.
