What happened: Sales of newly-built homes increased more than expected in December due in part to a resilient demand for housing – despite a recent rise in mortgage rates. Builders saw a strong uptick in sales at the end of the year and altogether there were 683,000 new home sales in 2024, 2.6% higher than in 2023. In 2024, new home sales increased most in the Midwest where homes remain relatively more affordable.
Why it matters: Mortgage rates have a massive impact on buyers’ purchasing power, and big swings in rates are impacting affordability and sales. While existing homes sales fell to a near 30-year low in 2024, new home sales continued to increase. This is because the decline in existing home sales is partly due to rate lock – existing homeowners refusing to give up their ultra low pandemic mortgage rates.
According to Zillow data, the price per square foot of newly built single family homes was up roughly 5% year-over-year in November.
While affordability remains under pressure, builders have continued their shift toward higher-density housing while offering rate buy-downs and other incentives to make the math work for homebuyers. The latest survey data from the National Association of Home Builders showed builder confidence has continued to rebound.