New Home Sales Slide in February, but Existing Home Sales Surge – Will the Market Rebound?

February Sees a Decline in New Home Sales

In February, the sales of newly constructed homes declined, going against the trend of an increase in sales of previously owned homes. However, despite the decline from January’s revised annual rate, the number of new home sales in February was still 5.9% higher than the same time last year. In contrast, existing home sales saw a boost of 9.5% in February due to slightly lower interest rates that alleviated some of the market’s stagnation.

If the sales of new homes were to continue at the same rate throughout the year, approximately 662,000 homes would be sold. This figure is slightly below the expectations of economists surveyed by Dow Jones Newswires and Wall Street Journal, who predicted an annual rate of 675,000 new home sales.

High interest rates have made current homeowners wary of selling their homes and purchasing new ones with higher mortgage rates. This has led to a reduced inventory of homes for sale and prompted economists to suggest that building more new homes would help stimulate the market. Nancy Vanden Houten, an economist at Oxford Economics predicts that the pace of new home sales will increase throughout 2024 supported by lower mortgage rates, increased supply and a scarcity of existing homes for sale.

Overall, despite a slight decline in February, it is expected that the market for new home sales will improve over time as lower interest rates drive demand for housing and more affordable mortgage options become available.

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