Sales of new homes fell to an annual rate of 657,000 in January across the U.S., a 10.5% decline from December and a 1% drop from the previous year, according to the U.S. Census Bureau. Economists had expected new-home sales to reach 680,000 in January, according to data released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).

The latest sales figures also showed a 1.1% year over year drop from the annual rate of 664,000 homes sold in January 2024. The results were the latest sign that the housing industry is continuing to slow down.

The inventory of new homes for sale rose to 495,000 in January, pushing the supply of homes on the market to nine months at the current sales rate. That is up from December’s eight-month inventory. The growing supply of homes may signal pressure on home prices and could hinder new housing development.

The median sales price of new homes reached $446,300, while the average price jumped to $510,000.

Home sales in the Northeast suffered a 20% decline from December and a whopping 48.1% drop from one year ago. The Midwest saw declines of 16.7%, while home sales in the South fell 14.8%.

The West region bucked the negative trend with a 7.7% monthly sales increase and a 3.1% jump from one year ago.   

Builder sentiment had already tumbled before the Census report was released. This will likely just add to their pessimism, said Odeta Kushi, First American deputy chief economist, in a statement.

“Builders face both headwinds and tailwinds as they head into 2025. Builder sentiment fell in February to its lowest level since September,” Kushi said. “Optimism about single-family sales expectations for the next six months plummeted by 13 points, marking the largest one-month decline since the early months of the COVID-19 pandemic.”