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Predictions that 2024 will be another strong year for new-home sales were proven out in January, with mortgage applications for new-home purchases up 19.1 percent from a year ago, the Mortgage Bankers Association (MBA) reported Friday.
It was the 12th consecutive annual increase in the MBA’s survey of builders, and the 38 percent jump in applications from December (not seasonally adjusted) was the strongest January reading in the history of the survey, which was launched July 2013, MBA Deputy Chief Economist Joel Kan said.
Joel Kan
“Applications for new-home purchases were strong in January, as newly built homes remained an attractive option for prospective homebuyers who looked to take advantage of lower mortgage rates during the month,” Kan said in a statement.
At 700,000 units, the seasonally adjusted annualized pace of new-home sales in January was the highest sales pace since October 2023, Kan said.
The latest data from the Census Bureau, released Jan. 25, showed new-home sales in December picked up to a seasonally adjusted annual rate of 664,000 homes, up 8 percent from November and 4.4 percent from a year ago.
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MBA survey vs. Census estimates of new home sales
Seasonally adjusted, thousands of units. Source: MBA Builder Application Survey, Census Bureau.
The MBA’s Builder Application Survey, or BAS, has been an accurate predictor of trends in new-home sales, although it’s more likely to overestimate than underestimate the numbers that are released by the Census Bureau more than a month later.
While new-home sales have accounted for less than one in five total home sales in recent years, new-home sales grew last year while sales of existing homes shrank. The “lock-in effect” created by rising mortgage rates has kept many current homeowners from putting their homes on the market.
Forecasters predict sales of both new and existing homes will pick up this year, but that new-home sales will post stronger growth as homebuilders continue to work furiously to meet the demand that’s been amplified by the scarcity of existing homes for sale in many markets.
Another strong year for new home sales predicted
Source: January 2024 forecasts by economists with the Mortgage Bankers Association and Fannie Mae.
In a Jan. 19 forecast, MBA economists predicted that new-home sales will rise by 13 percent in 2024, to 761,000 homes, more than double the rate of growth for existing-home sales, which the MBA projects will increase by 5 percent, to 4.327 million.
The narrative is expected to flip next year, with the MBA forecasting lower interest rates will help boost sales of existing homes by 12 percent, to 4.848 million, and new-home sales growth cooling to 5 percent, with 801,000 new-home sales projected.
Forecasters at Fannie Mae were more cautious in issuing their latest projections last month, predicting an 8 percent increase in new-home sales this year, to 726,000, and 3 percent growth for existing-home sales, which Fannie Mae projects will total 4.238 million this year.
But Fannie Mae economists are in sync with MBA projections that existing-home sales will post double-digit growth in 2025 and outstrip growth in new-home sales. Forecasters at the mortgage giant expect new-home sales to grow by 14 percent in 2025, to 4.82 million, with new-home sales growing by a more modest 6 percent, to 771,000 homes.
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