New homes account for the highest share of all sales since 2005

The housing market in 2024 was about as frustrating for the real estate industry as you can imagine. High mortgage rates, low inventory and sky-high prices resulted in historically low sales at a time when agents are already wrestling with the changes related to the $418 million antitrust settlement signed by the National Association of Realtors (NAR).

Consider the numbers. According to NAR, existing-home sales finished 2024 at a dismal 4.06 million, which is the lowest since 1995, a period when existing-home sales never topped 4 million. It’s a stunning number given how bad the market was in the years after the financial crisis in 2008.

But new-home sales are a relative bright spot. According to U.S. Census Bureau data, these sales topped 683,000 in 2024, which is the second consecutive annual gain. And it’s a higher number than at any point since the financial crisis, other than 2020 and 2021 during the post-pandemic boom.

The existing-home sales slump coupled with a strong tally of new sales has resulted in new-home sales accounting for 14.4% of all transactions. That’s the highest share for new sales since 2005, which was during the building boom driven by cheaper housing, looser credit requirements and high demand for mortgage-backed securities.

In the current climate, homebuilders have advantages over existing-home sellers. High mortgage rates have kept potential sellers out of the market because many secured rock-bottom rates from the period after the financial crisis through 2022, when the Federal Reserve began to rapidly raise interest rates to combat inflation.

But builders have a slight immunity to this because they can offer rate buydowns. This is particularly true for builders with in-house mortgage businesses. They’re also more responsive to demand than home sellers, as they can build at a pace to match demand.

For this reason, new-home sales tend to be more volatile than existing-home sales. Since the beginning of 2020, the average monthly change for existing-home sales is -0.27%. For new-home sales, it’s +0.43%.

Sales finished 2024 on a relative high note. Existing-home sales in December clocked in at a seasonally adjusted annual rate of 4.24 million, the highest since February 2024. And December new-home sales finished at a seasonally adjusted annual rate of 698,000, their highest pace since 2021.

Whether 2025 will be a better market depends on who you ask. HousingWire’s comprehensive 2025 housing market forecast calls for existing-home sales to be slightly higher at 4.2 million. While that’s an improvement, it would be the third-lowest tally since 1995.

Most forecasts are more bullish, with NAR predicting 4.9 million existing-home sales, Fannie Mae expecting 4.5 million and Bright MLS expecting 4.4 million. The average among the forecasts analyzed by HousingWire is 4.35 million.