November 2022 New Home Sales
What Happened This Month:
New home sales posted a surprise advance in November, as the 30-year mortgage rate retreated from the early-month high to around 6.5% by the end. The decline in borrowing costs, combined with noticeable builder discounts, encouraged buyers looking for updated floor plans, technology, and warranty for a new home.
Sales of new homes notched a seasonally-adjusted annual pace of 640,000 in November, a 5.8% gain over the prior month, boosted by sales in the Midwest and West. However, the pace of sales was 15.3% below the same month in 2021. At 8.6 months’ supply, the inventory of new homes was lower than in October, but 38.7% higher than last year. The median price of new homes reached $471,200 in November, lower than October’s high, but still 9.5% above last year’s level.
What Does This Mean for the Market:
As we move toward the end of the year, housing market activity seems confined to the upper end of the market, where buyers with cash or available equity are better-able to close a deal. In November, 62% of new home sales were properties priced above $400,000, and only about 37% were priced below $300,000.
With the price of lumber on a decline, builders may find additional room for discounts for homes in the pipeline. Given that the list price of existing homes is still elevated, the new home market may offer more options for buyers over the next few months.
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