New home sales rose 4% in 2023—even as high mortgage rates and low supply buffeted the broader housing market.
New homes in December were sold at a seasonally adjusted annual rate of 664,000, up 8% from November’s upwardly revised rate of 615,000, according to Census data released Thursday. Economists had expected sales at a seasonally adjusted annual rate of 645,000, according to FactSet.
The…
New home sales rose 4% in 2023—even as high mortgage rates and low supply buffeted the broader housing market.
New homes in December were sold at a seasonally adjusted annual rate of 664,000, up 8% from November’s upwardly revised rate of 615,000, according to Census data released Thursday. Economists had expected sales at a seasonally adjusted annual rate of 645,000, according to FactSet.
The data caps out an unusual year for the housing market. Sales of previously owned homes, which make up the bulk of all house sales, fell 19% to 4.09 million, the National Association of Realtors said earlier this month—the lowest annual total in nearly 30 years. Sales of previously owned homes were hampered by rising mortgage rates and relatively low supply.
New home sales, meanwhile, expanded: there were 668,000 contracts signed to purchase new homes in 2023, the Census data show, up 4.2% from 2022’s levels. It was the first year-over-year expansion in new home sales since 2020, when they jumped as mortgage rates fell to historic lows and newly remote workers sought more space.
It’s not that builders were immune to broader housing market headwinds. Rather, companies were able to sell homes by offering incentives such as mortgage rate buydowns. Of the builders surveyed in January by the National Association of Home Builders, 62% offered sales incentives, a common theme from 2023 that has continued into the new year. While offering incentives can boost sales, it’s also a drag on profit margins.
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The picture for housing looks brighter in 2024.
said in its latest forecast that it expects mortgage rates to fall below 6% by the end of the year.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
