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ew home sales ended 2024 on a high note, increasing by 3.6% in December and 6.7% year-over-year. This helped offset the slowdown in existing home sales, but overall transactions remained relatively low. For the full year, an estimated 683,000 new homes were sold, a 2.5% increase from 2023.

    The real estate industry faced challenges in 2024, but new home sales provided a bright spot. Housing permits and starts also increased in December, suggesting more completions in the coming months. The National Association of Home Builders is forecasting a slight gain for sales in 2025 due to improvements in the labor market and a post-election policy reset.

    However, other policies from the Trump administration could negatively affect the construction industry, including proposals for steep tariffs and mass deportations. This could lead to higher material and labor costs, further constraining the supply of affordable homes. Builders may also struggle to compete with the existing home market, which has an increasing available supply of homes for sale.

    Despite these challenges, there is still pent-up demand in the market due to years of under-building. The U.S. is building about 10 new homes per 1,000 households, a level not seen since 1991. To address the affordability crisis, experts recommend increasing construction to keep up with new demand and make up for decades of under-building.

    The median price of new homes sold decreased in 2024, from $428,600 to $420,100. This is likely due to builders constructing smaller homes and offering more concessions to help close deals in an elevated mortgage rate environment. New home sales were strongest in the Midwest, with a 19% increase compared to 2023.

    Inventory levels for new homes remained relatively low, at 8.5 months at the end of December. Combined with existing home inventory, overall inventory is at 4 months, the lowest since April 2024.