New-Home Sales Rebound in November as Builders Offer Incentives

New-home sales in the United States rose in November after October’s numbers were disrupted by severe storms. According to data released Monday, sales of single-family homes increased 5.9% to an annualized rate of 664,000. This rebound brings the market closer to economist predictions of 669,000 and signals renewed activity after weather-related setbacks.

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Storm Recovery Fuels Sales Growth in Key Regions

The South, the largest homebuilding region, led the recovery with a 14% jump in sales. Hurricanes earlier in the fall had delayed transactions, but builders worked swiftly to close deals in November. The Midwest also saw gains, achieving its fastest sales pace since 2021. Meanwhile, the Northeast and West experienced slight declines, showing that the recovery is uneven across regions.

Increased Supply and Lower Prices Attract Buyers

The supply of new homes on the market reached its highest level since late 2007, giving buyers more options. Additionally, the median price of a new single-family home dropped by 6.3% from the previous year, settling at $402,600. Builders helped buyers further by offering discounts, mortgage rate buydowns, and other incentives to make purchases more affordable despite elevated borrowing costs.

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Builders Optimistic Despite Market Challenges

Homebuilders remain cautiously optimistic, bolstered by expectations that the new administration will ease regulations to support development. However, concerns remain about shrinking profit margins due to heavy sales incentives. Shares in the iShares US Home Construction ETF, which reached record highs in October, have since fallen by 20%, reflecting Wall Street’s skepticism about the sector’s profitability amid ongoing challenges.

Mortgage Rates Remain a Hurdle for Buyers

Mortgage rates, which had briefly dipped to a two-year low in September, are climbing again, nearing 7%. With the Federal Reserve signaling fewer interest-rate cuts in 2025, borrowing costs are likely to remain high, putting additional pressure on home affordability and dampening some demand in the housing market.

What the Sales Rebound Means for the Housing Market

The rise in November’s new-home sales reflects resilience in the market, especially as builders adapt with incentives to attract buyers. However, high borrowing costs and affordability concerns will continue to shape market activity in the coming months. The mixed recovery across regions underscores the importance of flexibility as the industry navigates economic uncertainties.

This report was moved forward from its original release date due to a federal holiday declared on December 24 by President Joe Biden’s executive order.

Also Read: 2025 US Housing Market Forecast: Will Rising Inventory and Prices Define Stability?