Sales of new single-family homes fell more than expected in January as builders faced a bevy of headwinds. 

Specifically, new-home sales fell 10.5% to a seasonally adjusted annual rate of 657,000 residences from an upwardly revised rate of 734,000 in December, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.   

The consensus estimate was for an annual rate of 680,000 transactions.  

Year over year, sales were down 1.1% from the January 2024 rate of 664,000.    

At the same time, the median sales price for a new home jumped to $446,300, its highest level since 2022. 

The declining numbers come as homebuilder sentiment has sunk over worries about tariffs, mortgage rates and high housing costs. In February, builder confidence fell to its lowest level since September, while builder expectations for single-family sales over the next six months plummeted 13 points, the largest one-month decline since the beginning of the pandemic in 2020.  

“Builders’ growing pessimism is due to several factors,” First American Deputy Chief Economist Odeta Kushi said. “While builders benefit from a chronic housing shortage made worse by the ‘seller’s strike’ driven by higher mortgage rates, they still face lingering supply-side and affordability challenges.  

“Additionally, existing-home inventory has picked up, and as it expands, builders’ relative supply advantage wanes. The share of total inventory made up by new homes remains elevated compared to historic norms but has leveled out in recent months.” 

Months’ supply of new homes for sale in January jumped 12.5% to nine months from eight months in December. Year over year, supply was supply was up 8.4% compared to January 2024, when it was at 8.3 months.