New Home Sales: Sales of new single-family homes in the U.S. took a hit in October, slipping more than anticipated. The Commerce Department’s report points to a 5.6% decline in sales, aligning with the recent trend of weakening sentiment among homebuilders. The primary culprit? Soaring mortgage rates that approached 8%, putting a damper on buyer enthusiasm even with builders dangling price reductions. But fear not, this setback is likely a short-lived hiccup, courtesy of the lingering shortage of existing homes in the market. With mortgage rates now easing from their recent peaks, industry pundits are anticipating a swift rebound in sales.
The new home sales figures, accounting for 15.2% of the total U.S. home sales, tell a tale of a seasonally adjusted annual rate of 679,000 units in October, a dip from September’s revised 719,000 units. While the monthly blues may have set in, there’s a silver lining in the form of a noteworthy year-on-year surge of 17.7%. The dip in sales was notably felt in the Midwest and the pricey West, while the Northeast and South basked in positive monthly growth.
The perennial scarcity of existing homesnearly 50% below pre-pandemic levelshas intensified the clamor for new constructions. Homeowners, basking in mortgage rates below 3%, are playing hard to get, reluctant to part with their abodes. This scarcity, in turn, is stoking the demand for shiny new residences. The 30-year fixed-rate mortgage, after a fleeting ascent to 7.79% in late October, has since mellowed, creating a more favorable environment for potential homebuyers.
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In the realms of numbers, the median price tag for these new abodes in October read $409,300, marking a hefty 17.6% plunge from the preceding year. This precipitous drop, the most significant percentage slide in records dating back to 1964, reflects the enticements and price slashes wielded by builders in their quest to woo buyers. But, hold your horses, economists warn against placing too much stock in this price plunge, urging attention to other indicators such as the Federal Housing Finance Agency‘s house price index, which steadfastly showcases robust price growth.
Looking ahead, the soothsayers of the industry foresee a spirited comeback in new home sales come November or December, fueled by the downward trajectory of mortgage rates. The market for new homes, by historical standards, remains robust, buoyed by the scarcity of existing home inventory. As the housing sector navigates the undulating waves of mortgage rate fluctuations, the overarching outlook remains positive, underpinned by sustained demand and the perpetual need for fresh additions to the housing inventory.
Our Reader’s Queries
Are US home sales declining?
In October, the United States witnessed a significant drop in existing home sales, reaching the lowest level in over 13 years. The primary reasons for this decline were the highest mortgage rates in two decades and a shortage of available houses, which discouraged potential buyers from entering the market.
What month are home sales highest?
Traditionally, May was the ideal month to sell a house, but in recent times, March has taken over that spot. In 2019, homes that were listed during the weeks of March 11 and 18 sold the quickest. However, it’s important to note that we excluded any irregular data from 2020. If you’re looking to sell your house for more than the asking price, it’s best to aim for the week of April 22.
How many homes have been sold in the US in 2023?
The United States has witnessed a steady increase in the number of existing homes sold over the years. As per the data, the number of homes sold in million units is expected to reach 4.32 by May 2023. In 2020, the number stood at 5.64 million units, while in 2016, it was 5.03 million units. The figures indicate a positive trend in the real estate market, which is likely to continue in the coming years.
How many new homes are sold in the US?
Home sales in the US reached a record high of nearly seven million in 2021, following a steady increase since 2018. However, the market experienced a contraction in 2022, with transaction volumes expected to drop below 4.8 million in 2023.