Housing activity for new residential construction started the year lower as high mortgages pushed buyers to the sidelines.
Sales of new homes slumped 10.5% in January to a seasonally adjusted rate of 657,000 units, down from December’s revised rate of 734,000, according to Census Bureau data released on Wednesday. That was much lower than Bloomberg consensus expectations for a pace of 680,000.
Some house hunters have resisted purchasing due to expensive borrowing costs. Mortgage rates topped 7% in January and remain within the same range.
High homeownership costs have influenced builders to sweeten the deal for budget-conscious house hunters.
PulteGroup (PHM) CEO Ryan Marshall told investors and analysts on their fourth quarter earnings call in late January that “affordability is probably the one headwind that’s out there, but I continue to think that the economy will figure out ways to solve for that.”
Still, would-be buyers are dealing with high home prices. The median sales price of new homes rose to $446,300 from $427,000 in January.
