Chart of the Week
Every Friday, MBA's Chart of the Week provides commentary and analysis on a topic of interest for the industry. This comes from variety of data sources, including proprietary data from MBA's own surveys and studies, as well as from government agencies and other reliable sources of mortgage, housing, and economic data.
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Current Chart of the Week
As home builders have increased production levels to meet recent demand for homes, residential housing starts and permits, and new home sales have continued at a relatively strong pace through early 2025. The steep increase in mortgage rates in the second half of 2022 put a momentary dent in the pace of sales. Still, new home sales have since stabilized, averaging 666,000 units in 2023 and 684,000 units in 2024, and were at an annualized pace of 676,000 units in February 2025, based on Census Bureau data.
As this week’s chart shows, there has been a notable shift in the composition of new homes sold by stage of construction over the past year, with an increased share of completed (“move-in ready”) homes relative to those under construction and those for which construction was had not yet started. In February, around half of the homes sold were completed homes, while 37 percent were under construction, and 14 percent were not yet started. In 2023, completed homes accounted for 42 percent of homes sold; from 2010 to 2020, that share was 37 percent. Unsold inventory of newly constructed homes has reached 500,000 units, a 9-month supply at the current pace of sales, and there have been signs of cooling prices for completed, move-in ready units, drawing more buyer interest for these homes.
Despite the elevated economic and policy uncertainty and ongoing affordability challenges in many markets, we expect growth in new home sales in 2025. The increasing inventory of homes for sale coupled with more stable mortgage rates and home prices will help to support home buying, as many households who were unable to buy due to a lack of inventory over the past two years have more housing options to choose from in a slightly less competitive market. Additionally, as other data show, the FHA share of new home purchase applications and the townhouse share of new construction continue to trend higher, indicative and supportive of first-time home buyer activity.
- Mike Fratantoni (mfratantoni@mba.org); Joel Kan (jkan@mba.org)