By Manuel Gutierrez, Consulting Economist to NKBA
Home builders surprised economists by selling 7.2 percent more houses in January than December, bringing the annual rate to 670,000 units. This marks the second monthly increase, elevating sales to their highest pace in 10 months. Contributing factors include a migration of retirees and falling house prices. But despite the spike, January sales were still 16 percent below January 2022 levels.
- January’s gain was concentrated in the South, where sales rose 17 percent to an annualized 451,000 units. This region currently accounts for more than 66 percent of the nation’s home sales — a steady rise from the late 1990s, when the South generated 40 percent of all new homes sold. This should not be surprising, as more Boomers retire each year — often migrating to warmer climes.
- As further evidence, sales fell by 7 percent in both the Midwest (to an annualized 67,000 homes) and the West (to 127,000 units). Sales in the Northeast plunged by 19 percent to just 25,000 homes.
- House prices fell 8 percent in January, with the median falling to $428,000. New-home prices have dropped 14 percent from just three months ago, when the median price was just under $500,000. January’s median price is the lowest in a year.
- Lower house prices reflect the dominance of the South, where homes typically sell below the national average. In 4Q 2022, the median house price in the South was 4 percent below the national median.
- The inventory of new homes for sale fell in January to 439,000 units, down 3 percent for the month, but inventory has risen 11 percent YOY. Inventory rose in all four regions on a yearly basis.
- In January, there were 68,000 “completed” houses (ready for immediate occupancy), 1,000 more than in December, and more than double the 32,000 in January 2022. The number of houses for sales but still under construction fell to 280,000 units.
