The January new home sales report from the government indicates an increasing demand for homes sold in an affordable price range.
In January 2019, 66 percent of new single-family home sales were priced between $200,000 and $400,000 vs. 22 percent of homes that were sold in the $400,000 to $750,000 range. This compares to 51 percent of homes sold in the $200,000 to $400,000 range in January 2018, and 29 percent that were sold in the $400,000 to $750,000 price category.
“These numbers indicate that builders who can produce housing at affordable price points in markets across the nation will be able to meet this sales demand that is generated by healthy household formations and solid job and wage growth,” said Robert Dietz, chief economist of the National Association of Home Builders (NAHB).
The report by the U.S. Department of Housing and Urban Development and the U.S. Census bureau shows that sales of newly built, single-family homes fell 6.9 percent to a seasonally adjusted annual rate of 607,000 units after a sharp upwardly revised December report. The sales data was delayed due to the partial government shutdown.
The data also show that new home sales posted a 2.3 percent gain for 2018 and the yearly total of 627,000 is the highest sales level since the Great Recession.
“Declines in mortgage rates brought buyers back into the market at the end of 2018 and moving into the new year,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “After a challenging period last fall, builders expect a solid spring home buying season.”
The inventory of new homes for sale rose to 336,000 in January, which represents a slightly elevated 6.6-month supply at the current sales rate. The median sales price was $317,200.
Regionally, on a monthly basis, new home sales fell 11.4 percent in the Northeast, 28.6 percent in the Midwest and 15.1 percent in the South. Sales rose 27.8 percent in the West.