New Home Sales Rise

• Existing home sales plunged to six-month lows amidst higher mortgage rates
• In contrast, new home sales continued to rise due to better supply and reduced prices
• New homes now represent a larger share of single-family home sales than before

Mortgage rates, measured by the thirty-year fixed rate, continued to increase (2% MoM/ 170% YoY/46% YoY4). Homeowners opted to hold onto their current properties, locked in by comparably lower mortgage rates. As such, counts of new listings for existing homes dropped (-3% MoM/ -26% YoY/ -28% YoY4). Not only has the upward trajectory of mortgage rates hampered new listings, but inventory also appeared stronger as existing homes sat on the market longer (7% MoM/ 1% YoY/ -43% YoY4).

Constrained inventory helped support existing homes' median sales price (4% MoM/ -2% YoY/ 46% YoY4). Persistent reluctance to sell has led to a prolonged nationwide decrease in existing home sales, plummeting to a six-month low (-3% MoM/ -23% YoY/ -18% YoY4). On the flip side, the unique market landscape presented opportunities for homebuilders. Prospective homebuyers are more likely to purchase new homes.

Driving forces behind this trend are better supply (30% YoY4) and substantial incentives offered by homebuilders. Initiatives such as mortgage rate buydowns, coverage of closing fees, and other discounts reduced new home prices, although it remains elevated compared to pre-pandemic norms (-8% MoM/ -8% YoY/ 24% YoY4). Unlike existing home sales, new home sales continue to rise steadily (4% MoM/ 12% YoY/ -2% YoY4). Newly constructed homes currently represent a larger share of single-family home sales in contrast to the historical average.

1YoY4?= comparison with pre-pandemic level