December New Home Sales See Unexpected Bump

Buyers took advantage of increasing new construction inventory in December, giving purchase activity a boost at the end of the year.

New home sales jumped last month, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development, which reported an increase of 3.6% on the month to a seasonally adjusted annual rate of 698,000.

Sales rose annually as well, up 6.7% from the December 2023 estimate of 654,000.

The bump took economists, who predicted 675,000 annualized sales, by surprise.

It’s also a marked difference from last month’s existing homes data, which put annualized sales at their lowest point since 1995 despite a small uptick in demand.

At the end of the month, 494,000 new homes were for sale. At the current rate, this represents an 8.5-month supply.

The median sales price of new houses sold was $427,000, while the average was $513,000. 

Home prices are still rising nationwide, but cooldowns have begun in many metros as inventory increases. This is especially true in the South, which has seen significant new construction.

“House price growth nationally started 2024 strong at a 7% annualized pace of growth but gradually slowed over the course of the year… If similar conditions persist through 2025, we should expect very moderate price appreciation,” Mark Fleming, chief economist at First American, commented.

“As more homes become available, the power dynamics can shift in favor of buyers, putting downward pressure on prices. All else equal, house price growth in markets with higher inventory of homes available for sale will weaken compared to those with low inventory relative to demand.”