October 2024 New Home Sales
What Happened This Month:
New home sales dropped sharply in October after a strong showing in September. The number of new homes sold fell to 610,000 on a seasonally adjusted annual basis, down 17.3% from September 2024 and down 9.4% from October 2023. The rebound in mortgage rates throughout October and increased competition from the existing home market led to new home sales struggling in the most recent month of data. Fewer newly built homes sold in October, but they fetched higher prices: the median sales price for new homes sold in October jumped to $437,300 from $426,800 in September, and this month’s median sales price is 4.7% higher than it was last year.
The slowdown primarily occurred in the region where new home sales have recently been far and away the strongest: the South. Southern new home sales fell 27.7% month-over-month and 19.7% year-over-year. The only other region that saw a decline was the West, down 9.0% month-over-month and 1.3% year-over-year, while the Midwest saw modest growth and the Northeast exploded, up 53.3% month-over-month and 35.3% year-over-year. As expected, new home sales trends are following new home construction trends, with activity cooling in the South where it has recently been red-hot and picking up in the Northeast where it was previously a tiny share of overall activity.
New Home Inventory Growing:
New home inventory reached a new high-water mark for 2024 with 481,000 newly built homes for sale in October on a seasonally adjusted annual basis. The selling slowdown combined with strong numbers of completed homes throughout the year has resulted in a peak number of new homes on the market, and the months of supply in the new home segment jumped up from 7.7 in September to 9.5 in October. The new home market is quickly becoming a buyer’s market.
More Completed New Homes are on the Market than Non-Started Ones:
Of the available new homes for sale at the end of October, 21.7% were not started, 54.7% were under construction, and 23.6% were completed. This held mostly steady from September, and continues to exhibit a behavior more consistent with the pre-pandemic market in which more completed homes are on the market than ones that have not been started. During the peak and post-peak pandemic homebuying frenzy, builders were listing and selling more not-started homes than completed ones.
What does this mean for buyers and builders?
Though this month’s new home sales metrics are a bit disappointing to builders and agents who sell newly built homes, prospective buyers should be encouraged that their option set of new homes for sale is growing. Buying a new build offers a host of advantages over existing homes, including warranties, reduced maintenance costs, and access to fresh community amenities. If buyers can successfully navigate through the current high mortgage rate environment, they may be able to find a brand new home that fits their budget.