U.S. New Home Sales Slip in December as Inventory Declines
Sales of new U.S. single-family homes edged lower in December, but builders continued to reduce excess inventory, potentially setting the stage for more housing construction in the coming months.
According to the Commerce Department’s Census Bureau, new home sales fell 1.7% to a seasonally adjusted annual rate of 745,000 units. In November, sales had risen to 758,000 units from 656,000 in October. The release of the data had been delayed due to last year’s government shutdown.
New Home Sales Remain Volatile but Show Annual Growth
New home sales represent a relatively small portion of total U.S. housing transactions and are often volatile from month to month. The figures are recorded at the time contracts are signed.
Despite the monthly decline, new home sales were up 3.8% compared to the same period a year earlier, indicating underlying resilience in the housing market.
Housing Inventory Continues to Shrink
Housing supply improved during December. New housing inventory declined to 472,000 units from 485,000 units in November.
The number of homes currently under construction fell to its lowest level in nearly four and a half years. At the current sales pace, it would take approximately 7.6 months to clear the available supply of new homes, slightly down from 7.7 months in November.
A reduction in excess inventory could support future construction activity as builders adjust supply to meet demand.
Home Prices Rise as Mortgage Rates Ease
The median price of a new home increased 4.2% year-on-year to $414,400 in December.
The housing market may also benefit from easing mortgage rates. The average rate on a 30-year fixed mortgage declined to 6.01% this week, marking the lowest level since September 2022. The rate had stood at 6.09% the previous week, according to data from Freddie Mac.
Lower borrowing costs could help stimulate demand and provide additional support for the U.S. housing market in early 2026.
