But new-home sales are a relative bright spot. According to U.S. Census Bureau data, these sales topped 683,000 in 2024, which is the second consecutive annual gain. And it’s a higher number than at any point since the financial crisis, other than 2020 and 2021 during the post-pandemic boom.
The existing-home sales slump coupled with a strong tally of new sales has resulted in new-home sales accounting for 14.4% of all transactions. That’s the highest share for new sales since 2005, which was during the building boom driven by cheaper housing, looser credit requirements and high demand for mortgage-backed securities.
In the current climate, homebuilders have advantages over existing-home sellers. High mortgage rates have kept potential sellers out of the market because many secured rock-bottom rates from the period after the financial crisis through 2022, when the Federal Reserve began to rapidly raise interest rates to combat inflation.
But builders have a slight immunity to this because they can offer rate buydowns. This is particularly true for builders with in-house mortgage businesses. They’re also more responsive to demand than home sellers, as they can build at a pace to match demand.
For this reason, new-home sales tend to be more volatile than existing-home sales. Since the beginning of 2020, the average monthly change for existing-home sales is -0.27%. For new-home sales, it’s +0.43%.
Sales finished 2024 on a relative high note. Existing-home sales in December clocked in at a seasonally adjusted annual rate of 4.24 million, the highest since February 2024. And December new-home sales finished at a seasonally adjusted annual rate of 698,000, their highest pace since 2021.
Whether 2025 will be a better market depends on who you ask. HousingWire’s comprehensive 2025 housing market forecast calls for existing-home sales to be slightly higher at 4.2 million. While that’s an improvement, it would be the third-lowest tally since 1995.
Most forecasts are more bullish, with NAR predicting 4.9 million existing-home sales, Fannie Mae expecting 4.5 million and Bright MLS expecting 4.4 million. The average among the forecasts analyzed by HousingWire is 4.35 million.
First Time Home Buyer FAQs - Via HousingWire.com
