In January, sales of new single-family homes declined 10.5%, falling to a seasonally adjusted annual rate of 657,000, as builders faced challenges like tariffs, rising mortgage rates, and high housing costs. This drop in sales signifies a decline in builder confidence, with expectations for future sales also decreasing significantly. Concurrently, the median sales price of new homes reached its highest point since 2022 at $446,300, while inventory of new homes for sale increased. This shifting market indicates that builders are struggling to reconcile supply and demand amid a housing shortage and economic pressures.
"Builders' growing pessimism is due to several factors. While builders benefit from a chronic housing shortage made worse by the 'seller's strike' driven by higher mortgage rates, they still face lingering supply-side and affordability challenges."
"Existing-home inventory has picked up, and as it expands, builders' relative supply advantage wanes. The share of total inventory made up by new homes remains elevated compared to historic norms but has leveled out in recent months."
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