New Home Sales Decrease, While Existing Homes Sales Surge: What’s Driving the Housing Market in 2024?

February Sees a Decline in New Home Sales

In February, the sales of newly constructed homes decreased, going against the trend of an increase in sales of previously owned homes. Despite this decline, new home sales were still 5.9% higher than the same time last year. On the other hand, existing home sales saw a boost of 9.5% due to lower interest rates that alleviated market stagnation. The high interest rates have made current homeowners hesitant to sell their homes and purchase new ones with higher mortgage rates, leading to a reduced inventory of homes for sale.

According to data from the U.S. Census Bureau, if the sales of new homes were to continue at the same rate throughout the year, approximately 662,000 homes would be sold. However, this figure is slightly below the expectations of economists surveyed by Dow Jones Newswires and Wall Street Journal who predicted an annual rate of 675,000 new home sales.

Nancy Vanden Houten, an economist at Oxford Economics predicts that the pace of new home sales will increase throughout 2024 supported by lower mortgage rates, increased supply and a scarcity of existing homes for sale. Building more new homes could help stimulate the market as it would provide more options for buyers and increase inventory levels.

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