In the last two months of 2018, new home sales in all four major regions fell, according to the latest data from Redfin.
Redfin reports the most dramatic decline was seen in the Northeast region, where sales of new homes fell by 16.1% in December alone.
According to the company, this trend has been reoccurring reality for the Northeast, as this region has not experienced new home sales growth since January 2017.
“All around the country homebuyers were backing off at the end of last year due to high prices and high mortgage interest rates, and 2018 tax reform made it even more expensive to buy high-priced homes in high-tax states like Massachusetts, Connecticut and New York,” Redfin Chief Economist Daryl Fairweather said. “New homes tend to be pricier than existing homes, which is one reason sales of new homes dropped off so much in the Northeast.”
Redfin's report indicates that new homes could potentially increase within upcoming months. Notably, homebuilder confidence increased in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index.
“The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment,” NAHB Chairman Randy Noel noted. “Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months.”
According to Redfin, another factor that could result in a boost in new home sales is the decline in the cost of building materials, as reports indicate material costs declined 1.8% in December.
Here are the annual drops in new home sales in the last two months of 2018:
(Click to enlarge; image courtesy of Redfin)
NOTE: Redfin's data is based on more than 150 U.S. markets and represents year-over-year growth.
