New Home Sales in 2024: Driven by Lower Mortgage Rates and a Housing Shortage

February Sees a Decrease in New Home Sales

Despite the slight decrease in new home sales from January, the annual rate of new home sales in February was still 5.9% higher than the previous year. In contrast, existing home sales saw a significant increase of 9.5% during the same month, attributed to lower interest rates easing market constraints. High mortgage rates have caused homeowners to be hesitant about selling and buying new homes, which has led to fewer homes for sale. Many economists suggest that building more new homes could help unlock the stagnant market.

According to data from the U.S. Census Bureau, if the current rate of sales continues, 662,000 new homes will be sold this year, slightly below economists’ expectations of 675,000 annually. However, experts predict that new home sales will increase over the rest of the year due to lower mortgage rates, increased supply, and a shortage of existing homes for sale. These factors are likely to drive sales of new homes higher in 2024 according to Nancy Vanden Houten of Oxford Economics.

Sophia Reynolds

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