New home sales ticked up in January, despite elevated mortgage rates
Written by ABC Audio. All rights reserved. on February 26, 2024
(WASHINGTON) — New home sales ticked up in January, despite a twin burden imposed by elevated mortgage rates and expensive housing prices, according to U.S. Census data released on Monday.
Sales of new single-family homes rose 1.8% in January compared to the previous year, data showed. The survey found an estimated 661,000 homes were sold in January.
On a monthly basis, sales climbed 1.5% from December.
The fresh data offers a glimmer of optimism for an otherwise sluggish housing market.
By contrast, existing-home sales declined in January compared to the previous year, the National Association of Realtors said last week.
Mortgage-purchase applications fell 10% from a week earlier, data from the Mortgage Bankers Association on Wednesday showed.
The divergent trends for new and existing home sales trace back to elevated mortgage rates. The average interest rate for a 30-year fixed mortgage has soared to 6.9%, rebounding after a steady decline at the end of last year, according to a report from Freddie Mac on Thursday.
Homeowners are largely opting to stay in their current residences because they would rather stick with comparatively low-rate mortgages than shift to high-rate ones.
Mortgage rates track yields on 10-year Treasury bonds, which are highly sensitive to the benchmark interest rate set by the Federal Reserve.
The Fed says it expects to cut interest rates this year but so far has kept the rates at high levels, since inflation has resisted downward pressure in recent months.
The supply of new homes, on the other hand, is garnering interest from prospective buyers unable to find homeowners willing to sell.
The median sales price of new houses sold in January was $420,700.
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