New Home Sales Dip in January

While bidding wars and showings may have increased in January, the number of sales of new home fell.

According to the National Association of Home Builders, the estimated sales number of new homes in January was 801,000, a 4.5% decrease from December’s sale of 839,000. It also represents a year over year decrease of 19.3% from January 2021, when 993,000 new home units were sold. In the Northeast, new home sales fell 10.7% month to month. The organization pointed out that demand was especially high in January 2021 due to historic low mortgage rates and COVID. January 2022 rates are a return to pre-pandemic levels.

While sales fell, median prices rose to $425,300, up 13.4% from January 2021, suggesting that the extra expenses of rising supply costs is partly being absorbed by buyers. Realtor.com® reported that only 8% of new homes in January were priced below $300,000, compared to 26% a year ago. Fortunately, inventory of new homes remains balanced, with a 6.1-month supply, with total inventory (including construction across all stages) reaching 406,000, up 34.4% year over year. NAHB reported construction times are taking longer than in the past, which explains why so many homes are still in the building phase of construction.

Realtor.com® also reported that only about 10% of new homes for sale are actually completed, with most of the rest being in progress, representing 64%. Yet, more than a quarter (26%) have not been started. However, the site reports that we should expect to see about 800,000 new homes in 2022, up from 767,000 in 2021, but down from 822,000 in 2020, which could help boost the low inventory that has been plaguing the market.