Mortgage News March 13, 2023
According to data published by the U.S. Census Bureau and the Department of Housing and Urban Development, new home sales in the United States rose 7.2% in January from December to a seasonally adjusted annual pace of 670,000 homes. This is the strongest sales pace since March 2022 and marks the second consecutive month of sales growth. Despite this growth, new home sales are still down 19.4% on a year-over-year basis.
Holden Lewis, NerdWallet’s home and mortgage expert, attributed the increase in contract signings to a decline in mortgage rates in January after a run-up in rates in October and November. New home sales are likely being hampered by higher rates since January.
The backlog of new construction homes emerging into the market just in time for the spring shopping season, coupled with incentives such as price drops, has resulted in a decrease in the median new home sales price from $465,600 in December to $427,000 in January, despite the increase in demand. At the current sales pace, there are just 439,900 new homes available, which represents a 7.9-month supply, down from 8.7 months in December.
Regionally, on a monthly basis, the sales pace was down in the Northeast, Midwest, and the West, with the Northeast recording the largest drop at 19.4%. It was only the South that rose on a monthly basis, jumping 17.1%. Annually, all regions saw a drop in sales pace, with the West experiencing the largest drop at 46.9%.
Experts are optimistic about the spring selling season for new construction, as there is still a large chunk of new construction homes currently under construction. When those homes hit the market, especially over the next few months, spring home buyers who can afford the higher new construction price tags will have more options and opportunities to break into homeownership.
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