January New Home Sales Plummet to Lowest Point Since 2022

New home purchases across the United States dropped dramatically in January, falling 17.6% to their weakest level in nearly three and a half years. Severe winter weather and snowstorms likely contributed to the sharp decline as potential buyers stayed indoors.

WASHINGTON – The housing market took a significant hit in January as new home purchases plummeted to their weakest point in nearly three and a half years, according to federal data released Thursday.

The Commerce Department’s Census Bureau reported that new single-family home purchases declined by 17.6% to a seasonally adjusted annual rate of 587,000 units – marking the lowest figure since October 2022.

The January numbers fell well short of economist predictions, which had forecast sales would drop to 720,000 units. December’s figures were also revised downward, showing sales at 712,000 units rather than the initially reported 745,000 unit pace. Every region of the country experienced declining sales.

Severe winter conditions that brought heavy snowfall and freezing temperatures to much of the nation in January likely prevented many potential homebuyers from visiting properties, contributing to the steep decline.

The Census Bureau continues working to catch up on delayed data releases stemming from last year’s government shutdown.

New home purchases represent only a small portion of overall U.S. housing sales and typically show significant month-to-month fluctuations. These sales are recorded when contracts are signed. Compared to January of the previous year, new home sales plunged 11.3%.

The downturn occurred even though mortgage rates had decreased at the beginning of the year following President Donald Trump’s directive for government-backed mortgage companies Fannie Mae and Freddie Mac to increase their purchases of mortgage-backed securities.

However, mortgage rates have climbed in recent weeks as the U.S.-Israeli conflict with Iran pushed oil prices up more than 40% since fighting began in late February, causing U.S. Treasury yields to rise. Mortgage rates typically follow the benchmark 10-year Treasury yield.

This upward trend in rates could prevent any recovery in new home sales while keeping housing inventory high. Elevated construction costs due to import tariffs, labor shortages from immigration restrictions, and limited availability of building lots are all hampering single-family home construction.

Available new housing inventory increased slightly to 476,000 units in January from December’s 474,000 units.

Based on January’s sales rate, clearing the current supply of new homes would require 9.7 months, compared to 8.0 months in December. The median price for new homes fell 6.8% to $400,500 in January compared to the same month last year. The majority of homes sold in January were priced below $499,999.