Sales of new U.S. homes jumped in 2023, according to government data released Thursday, supported by a lack of inventory in the existing homes market as mortgage rates remained elevated.

An estimated 668,000 new homes were sold last year, representing a 4.2% rise from the 2022 figure, the Commerce Department said.

December sales beat expectations to log a seasonally adjusted annual rate of 664,000 — 8.0% above the revised November pace.

Compared to the same month a year ago, December’s pace was up 4.4%.

Key factors encouraging buyers, according to analysts, were a dip in mortgage rates at the end of last year as well as the continued lack of supply in the existing home market.

With mortgage rates at elevated levels, homeowners who locked in much lower rates previously have been dissuaded from putting their properties up for sale, nudging buyers into the new homes sector.

In December, the median sales price of new homes crept down to $413,200.

For the full year, the median cost was $427,400, lower than in 2022 as well.

“New homes sales were remarkably resilient in 2023, despite the slump in overall housing demand,” said Pantheon Macroeconomics in a recent report.

“We expect a further, sustained, fall in mortgage rates this year, as inflation drops, to drive stronger home sales overall,” Pantheon economists added.

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