New house sales in the US increased dramatically in 2023, according to government statistics released on Thursday. This increase is likely due to a shortage of available inventory in the current home market as well as persistently high mortgage rates.

According to the Commerce Department, sales of new residences increased to an expected 668,000 in 2023, a 4.2 percent increase from the previous year.

Sales in December exceeded forecasts, recording a seasonally adjusted annual rate of 664,000, which is 8.0 percent faster than the revised pace for November.

December's pace increased by 4.4 percent as compared to the same month the previous year.

According to experts, the decline in mortgage rates towards the close of the previous year and the ongoing scarcity of available homes in the current market were significant motivators for purchasers.

Homeowners who had previously locked in far lower mortgage rates have been discouraged from listing their properties for sale due to the rising mortgage rates, which is pushing purchasers into the new home market.

The median sales price of new homes fell to $413,200 in December, the lowest amount in the previous two years.

The December price drop, according to Oxford Economics' principal US economist Nancy Vanden Houten, "reflects in part ongoing builder discounts."

"The sizes of new homes have been trending lower as builders look to attract buyers with more moderate incomes," she wrote in an email.

The median cost for the entire year was $427,400, which was less than it was in 2022 as well.

In 2023, "new home sales were remarkably resilient, despite the slump in overall housing demand," according to a recent research from Pantheon Macroeconomics.

Data on new sales may be a "unreliable guide" to activity in the housing industry, according to Pantheon Macroeconomics' Ian Shepherdson.

However, the supply of new homes is still much higher than it was before the epidemic and is still higher than the supply of existing dwellings.

"That gives new home sales plenty of scope to climb further in the near term if, as we expect, lower mortgage rates continue to drive a recovery in demand," he stated.

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