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Image Credit: Microsoft Bing Image Generator

The trifecta of two major hurricanes and rising mortgage rates continued to negatively impact the market for new homes in the United States in November 2024. Widespread damage from Hurricanes Helene and Milton in the southeastern U.S. depressed new home sales in the region. Meanwhile, mortgage rates remained high during November 2024 despite the Federal Reserve's action to cut interest rates on 7 November, putting a further damper on new home sales outside the hurricane damaged area.

There was a silver lining in that the median and average sale prices of new homes decreased in November 2024. Initial estimates put the median sale price of a new home sold at $402,600, down $23,000 from October's level. Meanwhile, the average sale price of a new home sold dropped over $40,000 to $484,800.

The combination of reduced new home sales and falling prices lowered the market capitalization of the U.S. new home market. Our initial estimate of the time-shifted trailing twelve month average of the total value of new homes sold during November 2024 is $27.52 billion, which falls below October 2024's revised market cap estimate of $28.15 billion. Downward revisions in previous months confirm the U.S. new home market cap remains substantially below its December 2020 peak.

The three following charts present the trends for the U.S. new home market capitalization, the number of new home sales, and their sale prices as measured by their time-shifted, trailing twelve month averages from January 1976 through November 2024.

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New home sales dip:

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Prices decline, but still elevated:

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Despite falling prices, new homes remained unaffordable because mortgage rates continued climbing in November 2024. After bottoming at an average of 6.18% in September 2024, the average conventional 30-year fixed rate mortgage in the U.S. carried an average interest rate of 6.81% in November 2024.

The following chart reveals new homes remained fully unaffordable by the typical American household in November 2024:

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Consequently, the new home affordability crisis powered into its 32nd consecutive month.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 23 December 2024. 

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 23 December 2024. 

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 3 January 2025. Note: Starting from December 2022, the estimated monthly mortgage rate is taken as the average of weekly 30-year conventional mortgage rates recorded during the calendar month.

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