US New Home Sales Plunge to Near 3-Year Low in January

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Sales of new U.S. single-family homes fell 17.6% in January to a seasonally adjusted annualized rate of 587,000 units, the lowest level since October 2022. The decline was larger than expected, with economists forecasting a drop to 720,000 units. Snowstorms and frigid temperatures across the country may have made it difficult for prospective buyers to view properties.

Why it matters

New home sales are an important indicator of the health of the housing market and the broader economy. The sharp decline in January suggests that high mortgage rates and other headwinds are weighing on homebuyer demand, which could have ripple effects on construction, employment, and consumer spending.

The details

The Census Bureau reported that new home sales fell in all four regions of the country in January. The median new house price also dropped 6.8% from a year earlier to $400,500. High new housing inventory, elevated construction costs, and labor shortages are hindering single-family home construction.

• New home sales fell to a pace of 587,000 units in January, the lowest level since October 2022.
• Data for December was revised lower to show sales falling to a pace of 712,000 units instead of the previously reported 745,000 unit rate.
• Economists had expected home sales to fall to a rate of 720,000 units in January.

What’s next

The rising trend in mortgage rates could limit any rebound in new home sales and keep supply elevated, which may further weigh on the housing market.