The sale of newly built homes dropped to the lowest level in two years in October as high mortgage rates and property prices put off prospective buyers.
New home sales dropped by more than 100,000 units last month, reaching a seasonally adjusted annual rate of 610,000, data from the St. Louis Federal Reserve Bank shows. A month prior in September, 738,000 new units were sold, meaning new sales have dropped by 17.3 percent month-over-month.
While the rate of new home sales has peaked and dipped throughout the year to date, the last similarly low sales number was reported in November 2023, when 611,000 units sold. Before that, the most recent significant low of 519,000 monthly sales was reported in July 2022.
The U.S. housing market has been tough for buyers for a number of years now, following on from more favorable buying conditions, especially low interest rates, during the coronavirus pandemic.
"Homebuyers are burnt out from the housing market since the pandemic, and fatigued by record high prices and stubbornly high rates," real estate expert and CEO of Reventure, Nick Gerli, told Newsweek. "There will be no quick fix in this market. Prices need to come down and wages/incomes need to go up for homebuyers to feel more comfortable jumping into homeownership."
The affordability of homes in the U.S. has become a significant issue in recent years. The current median house price in the U.S. for the third quarter of 2024 is $420,400, according to the St. Louis Federal Reserve Bank, up more than $100,000 on $317,100 in the second quarter of 2020.
Higher prices correlate with a dip in home sales, and new homes aren't the only properties where sales are on the downturn. Data from the National Association of Realtors (NAR) reveals sales of existing homes are now lower than the record low during the COVID-19 lockdown in May 2020. In October 2024, the U.S. recorded 3.96 million completed sales, compared to 4.09 million in May 2020, although this month's figure is up from the previous 2024 low of 3.83 in September.
Sales of existing homes have also fallen significantly since January 2022, a time when interest rates were at rock bottom, when 6.43 million homes were sold, according to the NAR figures. By January 2023, when interest rates had risen to 4.5 percent, sales had dropped to 4.07 million. Although there have been fluctuations in sales since then, the market has not recovered to exceed the 5 million or so monthly sales that were typical before the pandemic.
Due to current market conditions, the overwhelming majority of Americans believe that now is currently a poor time to shop for a home, according to the University of Michigan's October consumer sentiment survey. It found that 82 percent of 948 interview subjects believe now is not a good time to purchase a home, compared to 77 percent in October 2023.
English (US) ·