New Home Sales Decline in February, But Economists Predict Increase Throughout 2023

In February, the sales of newly constructed homes declined, going against the trend of an increase in sales of previously owned homes. However, despite this decline, the number of new home sales was still 5.9% higher than the same time last year.

This slight decline from January’s revised annual rate was due to high interest rates that made current homeowners wary of selling their homes and purchasing new ones with higher mortgage rates. This has led to a reduced inventory of homes for sale and prompted economists to suggest that building more new homes would help stimulate the market.

According to data from the U.S. Census Bureau, if the sales of new homes were to continue at the same rate throughout the year, approximately 662,000 homes would be sold. This figure is slightly below the expectations of economists surveyed by the Dow Jones Newswires and Wall Street Journal, who predicted an annual rate of 675,000 new home sales. Despite this slight decline in February, economists predict that the pace of new home sales will increase throughout 2024, supported by lower mortgage rates, increased supply and a scarcity of existing homes for sale. Nancy Vanden Houten, an economist at Oxford Economics predicts that this pace will increase further due to these factors and is likely to drive growth in other areas such as construction spending and consumer confidence.