New home sales in January rose +7.2% m/m vs. +0.7% estimate. Noticeably they were revised up to +7.2% in prior month (rev up from +2.3%). The median new home price fell by 0.7% y/y to $427,500: the first decline since August 2020. Months’ supply fell from 8.7 to 7.9. On a year-over-year basis, new home sales were down 19.4%. We have seen in the weekly mortgage applications reports that the pullback in mortgage rates spurred some renewed demand among home buyers. Reality is though with rates over 6.5% again, and inflation high- and real-income hurt lower affordability and supply pressures remain for many prospective buyers.
US new home sales for January 2023
- New home sales increased 7.2% month-over-month in January to a seasonally adjusted annual rate of 670,000 units (consensus 620,000) from an upwardly revised 625,000 (from 616,000) in December.
- On a year-over-year basis, new home sales were down 19.4%.
- The report reflects how rising mortgage rates are impeding sales of higher-priced homes, evidenced by the 46.9% year-over-year decline in the high-priced West region and declines in both median and average selling prices. The 0.7% decline in the median selling price was the first decline since August 2020.
- The median sales price decreased 0.7% yr/yr to $427,500 while the average sales price dropped 5.4% to $474,400.
- New home sales month-over-month/year-over-year by region: Northeast (-19.4%/-13.8%); Midwest (-6.9%/-34.3%); South (+17.1%/-2.2%); and West (-7.3%/-46.9%).
- At the current sales pace, the supply of new homes for sale stood at 7.9 months, versus 8.7 months in December and 5.7 months in January 2022. A six-month supply is typically associated with a more balanced market.
- The percentage of new homes sold for $399,999 or less accounted for 46% of new homes sold versus 39% in December and 42% one year ago.
New home sales month-over-month/year-over-year by region:
- Northeast (-19.4%/-13.8%);
- Midwest (-6.9%/-34.3%);
- South (+17.1%/-2.2%);
- West (-7.3%/-46.9%).
Note new home sales in the West has the highest concentration of higher-priced homes. The report reflects how rising mortgage rates are impeding sales of higher-priced homes, evidenced by the 46.9% year-over-year decline in the high-priced West region and declines in both median and average selling prices.
The report confirms the effect of rates and new home sales remain concentrated in higher-priced homes, as inflation pressures, pushed by supply constraints and labor shortages, are curtailing the building of lower-priced homes and pinching affordability for lower-income buyers.
Existing home sales account for 90% of US transactions and are calculated on a contract close basis. New home sales account for the remaining 10% and are based on contract signings.
The big question is after the surge in rates and slash in rates how much damage has been done with the massive wealth erosion.
Source: Census.gov
From The TradersCommunity News Desk