New home sales fell month-over-month in November to their lowest level since last November. But despite this dip, 2023 is poised to be one of homebuilders’ busiest years. Total new home sales are expected to reach about 5% higher than last year, while sales of existing homes are down by nearly 20% year-over-year.
In November, new home sales reached a seasonally adjusted annual rate of 590,000, according to data published on Friday by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). This is 12.2% below the revised October rate of 672,000 but is 1.4% above the November 2022 estimate of 582,000.
According to Robert Dietz, chief economist at the National Association of Home Builders (NAHB), new home inventory represented about 30% of the total inventory on the market in 2023, compared to the historical norm of 12%. In terms of sales volume, new home sales will make up 15% of transactions on the market at the end of 2023.
“We believe both of those figures will decline in 2024 as resale inventory increases with declining mortgage rates,” Dietz told HousingWire in an emailed statement.
The median price for a new home keeps going up
The median price for new homes climbed to $434,700 in November, up from $409,300 in October but remained 6% lower than a year ago. However, prices for new homes remain significantly higher than the median price for existing homes, which was $391,800 in November. In 2023, less than 1% of new homes sold posted sale prices below $200,000, while 36% were priced at $500,000 or higher.
However, homebuilders are making efforts in some markets to build smaller and cheaper homes even as the cost of land, materials and labor, among other factors, keep the prices elevated.
“The biggest challenge, according to many builders, is government regulation,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. “A 2021 study by the National Association of Home Builders found that local, state, and federal regulations added more than $93,000 to the price of a typical new home.”
