New Home Sales in USA Decline 10.5% in January 2025
New home sales in the United States fell more than expected in January, signaling a slowdown in the housing market and overall economic activity. High mortgage rates and severe winter weather are cited as primary factors.
New Home SalesHousing MarketMortgage RatesEconomic ActivityReal EstateReal Estate NewsFeb 27, 2025
This steep decline is a clear indication that the housing market and overall economic activity are slowing down early in the first quarter.
The drop in new home sales likely reflects the impact of persistently high mortgage rates, which have sidelined potential buyers.
Additionally, severe winter weather, including snowstorms and extremely cold temperatures, affected sales in many regions.
This report follows data from earlier this month showing a decline in retail sales in January and a cooldown in job growth.
The median new house price increased to $446,300 in January, up 3.7% from a year earlier, reaching its highest level since October 2022.
Despite this, the inventory of new homes rose to 495,000 units, the highest level since December 2007.
Of these, 274,000 units were under construction, unchanged from December, while 115,000 units were completed, the highest level since August 2009.
Christopher Rupkey, chief economist at FWDBONDS, noted, \
Frequently Asked Questions
What caused the decline in new home sales in January 2025?
The decline in new home sales in January 2025 was primarily caused by high mortgage rates and severe winter weather, including snowstorms and extremely cold temperatures, which affected sales in many regions.
How did the median new house price change in January 2025?
The median new house price increased to $446,300 in January 2025, up 3.7% from a year earlier, reaching its highest level since October 2022.
What is the current inventory of new homes, and how has it changed?
The inventory of new homes increased to 495,000 units in January 2025, the highest level since December 2007. This includes 274,000 units under construction and 115,000 units completed, the highest level since August 2009.
How have mortgage rates affected the housing market?
Mortgage rates have combined with elevated house prices to erode affordability. The average rate on the popular 30-year fixed-rate mortgage has remained around 7%, making it difficult for potential buyers to enter the market.
What are the prospects for the spring home selling season?
The prospects for the spring home selling season are uncertain. With mortgage rates still hover near 7% and home prices rising at a substantial pace, the near-term outlook for home sales is less than stellar.
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