New Homes Sales Decline, Existing Home Sales Surge: Boosted by Lower Interest Rates

February Sees a Decline in New Home Sales

Despite the decline in sales of newly constructed homes in February, existing home sales saw a boost due to lower interest rates. The decline from January’s revised annual rate was slight, but still 5.9% higher than the same time last year.

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 Dow Jones Newswires and Wall Street Journal, who predicted an annual rate of 675,000 new home sales.

The high interest rates have 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, prompting economists to suggest that building more new homes would help stimulate the market. Nancy Vanden Houten, an economist at Oxford Economics, predicts 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.

Despite this slight decline in February, it is expected that the market for new home sales will improve over the coming months as lower interest rates alleviate some of the stagnation in the market and builders continue to construct new homes for sale.

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