Limited Inventory Boosts New Home Sales in December
A limited amount of existing inventory along with solid demand helped new home sales end the year on an up note. The boost came even as buyers continue to grapple with housing affordability challenges.
Sales of newly built, single-family homes in December increased 3.6% to a 698,000 seasonally adjusted annual rate from an upwardly revised November number, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in December was up 6.7% compared to a year earlier.
“New home sales ended 2024 higher on ongoing limited resale inventory conditions,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kansas. “Builders are cautiously optimistic about the building market for 2025 given a post-election policy reset that seeks to eliminate unnecessary regulations.”
“New home sales ended the year 2.5% higher over the 2023 total,” said NAHB Chief Economist Robert Dietz. “NAHB is forecasting a slight gain for sales in 2025 given ongoing solid macroeconomic conditions, particularly for the labor market.”
A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction, or completed. In addition to adjusting for seasonal effects, the December reading of 698,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in December continued to rise to a level of 494,000, up 10% compared to a year earlier. This represents an 8.5 months’ supply at the current building pace.
Completed ready-to-occupy inventory is up 46% to a level of 118,000, compared to a year ago.
NAHB estimates the combined new and existing total months’ supply (8.5 months’ supply for new homes while the much larger resale market was at 3.1) fell to just a 4 months’ supply in December, the lowest since April 2024. The market has not been near a 6 months’ supply, which represents a balanced market, since 2012.
The median new home sale price in December was $427,000, up 2.1% from a year ago.
Regionally, on a year-to-year basis for 2024 totals, new home sales were strongest in the Midwest, up 19% in 2024. Sales also rose 1.7% in the Northeast and 2.6% in the West but declined 0.2% in the South.
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