The US Housing Market is Becoming Bifurcated
Sales of new homes picked up considerably to end 2024. But sales of old homes are at their slowest pace since 1995.
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Say this much for a housing market that’s been slower than a turtle on vacation: It’s making way for the new at least.
A report from the US Commerce Department published Monday showed that sales of new homes increased more than expected in December (and were higher than previously thought in November). But sales of old homes remain historically low — keeping the overall housing market as slow as molasses in January.
The Price is Not Right
Here’s the good news: Sales of new single-family homes rose 6.7% year-over-year in December, to a seasonally adjusted rate of 698,000 homes, per the Commerce Department. Meanwhile, November’s annual rate was revised upward to 674,000 units, a 10,000-home increase. The total number of new home sales for all of 2024, meanwhile, climbed to an estimated 683,000, up 2.5% from 2023 and the highest mark in three years.
But that’s just new home sales, which account for about 14% of total home sales in the US. Look under the hood, and the housing market still looks downright stagnant:
- In data published Friday, the National Realtors Association said that just 4.06 million existing homes were sold in the US in 2024, down 0.7% year-over-year and good for the lowest mark since 1995. Existing home sales in December were about 20% lower than the average monthly sales pace in 2019.
- Blame historically low supply and strong demand that’s keeping prices comparatively high. The national median existing home price in December was just over $404,000 — down from June’s all-time $426,900 record, but still 6% higher than December 2023.
Inventory Check: Supply might be catching up to demand. Key word: might. Per the Commerce Department, the inventory of new homes reached 494,000 units in December, up around 6,000 from November and good for the largest pool of empty homes since December 2007. Meanwhile, December also saw the completion of construction of 118,000 new homes, the most since August 2009. But builders are also waiting to break ground on some 108,000 homes, an all-time high. As Stephen Stanley, chief US economist at Santander US Capital Markets, tells Reuters, that just means builders are likely to “remain in cautious mode” to thin out supply.
