New Home Sales Remain Relatively Flat in February

2023-03-23T10:23:51-05:00

Higher mortgage rates and home prices, as well as increased construction costs contributed to lackluster new home sales in February, but signs point to improvement later in the year. Sales of newly built, single-family homes in February increased 1.1% to a 640,000 seasonally adjusted annual rate from a downwardly revised reading in January, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. However, new home sales are down 19% compared to a year ago. Builders continue to face challenges in terms of higher interest rates, elevated construction costs, and access to critical materials like electrical transformers. Access to AD&C financing will also be a challenge for builders in the coming months due to recent banking system stress. Nonetheless, the lack of existing home inventory means demand for new homes will rise as interest rates decline over the coming quarters. Indeed, there was an increase for sales of homes not yet started construction in February. There were 15,000 such sales in February (non seasonally adjusted). This is the highest monthly total since March 2022. A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the February reading of 640,000 units is the number of homes that would sell if this pace continued for the next 12 months. New single-family home inventory fell for the fifth straight month. The February reading indicated an 8.2 months’ supply at the current building pace. A measure near a 6 months’ supply is considered balanced. However, single-family resale home inventory stands at a reduced level of 2.5 months per NAR. The median new home sale price rose in February to $438,200, up 2.5% compared to a year ago. Elevated costs of construction have contributed to a rise in home prices. A year ago, roughly 15% of new home sales were priced below $300,000, while that share is now just 10% of homes sold. Regionally, on a year-to-date basis, new home sales fell in all regions, down 29.2% in the Northeast, 21.3% in the Midwest, 7.3% in the South and 40.6% in the West. Related ‹ The Fed Raises Again but Takes a More Dovish ToneTags: economics, home building, housing, new home sales, new sales, single-family

New Home Sales Remain Relatively Flat in February2023-03-23T10:23:51-05:00

Market Share of All-Cash New Home Sales Hits 32-Year High

2023-02-17T15:19:39-06:00

NAHB analysis of the most recent Quarterly Sales by Price and Financing published by the U.S. Census Bureau reveals that cash purchases made 11.2% of new home sales in the fourth quarter of 2022—the largest share since 1990. The share of cash purchases has climbed each of the past four quarters and six of the last seven. Although the median prices of a new home held firm or increased across other financing types, the median cash price fell from $450,600 to $370,900 in the fourth quarter. On an annual basis, however, home prices climbed higher in 2022, regardless of financing type. Conventional loans financed 76.1% of new home sales, down 0.2 percentage point over the quarter but still near a 15-year high. The share of VA-backed sales decreased to 5.2% in the fourth quarter and has declined 1.0 ppt since Q2 2022. The FHA-backed share of new home sales fell to 7.5% in the fourth quarter—a 1.1 percentage point decline (quarter-over-quarter) and 3.0 ppts lower than Q4 2021.  Since the second quarter of 2020, the market share of FHA-backed sales has declined by nearly two-thirds. As conventional loan market share increases, the FHA share typically falls and vice versa. However, this dynamic broke down in 2022 as surging interest rates pushed borrowers to the sidelines and led to an increased share of all-cash sales. Between the first and fourth quarters of 2022, the total share of conventional and FHA-loan new home sales fell 2.6 percentage points while the share of cash sales increased by the same amount. Although cash sales make up a small portion of new home sales, they constitute a larger share of existing home sales. According to estimates from the National Association of Realtors, 28% of existing home transactions were all-cash sales in December 2022, up from 26.0% in November 2022 and 23.0% in December 2021. Price by Type of Financing Different sources of financing also serve distinct market segments, which is revealed in part by the median new home price associated with each. In the fourth quarter, the national median sales price of a new home was $467.700. Split by types of financing, the median prices of new homes financed with conventional loans, FHA loans, VA loans, and cash were $531,400, $330,200, $498,200, and $370,900, respectively. Between 2020 and 2022, the median price of a new home increased 35.0%–nearly five times the average two-year change dating back to 1990. The price of homes bought with FHA loans rose the most over that period (+37.9%), while the median price of a home purchased using a VA loan increased the least (+24.8%). Related ‹ Townhouse Construction Share Climbs to Near Four-Decade HighTags: FHA, FHA loans, financing, home prices, new home cash purchases, new home prices, new home sales, sales by financing, VA, VA loans

Market Share of All-Cash New Home Sales Hits 32-Year High2023-02-17T15:19:39-06:00

New Home Sales Uptick in December But Market Weakness Remains

2023-01-26T16:25:34-06:00

While new home sales posted a modest gain in December, elevated mortgage rates and higher construction costs continue to hinder housing affordability and put a damper on consumer demand. The U.S. Department of Housing and Urban Development and the U.S. Census Bureau estimated sales of newly built, single-family homes in December at a 616,000 seasonally adjusted annual pace, which is a 2.3% increase over downwardly revised November rate of 602,000 and is 26.6% below the December 2021 estimate of 839,000. A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the December reading of 616,000 units is the number of homes that would sell if this pace continued for the next 12 months. Sales-adjusted inventory levels are at an elevated 9.0 months’ supply in December. A measure near a 6.0 months’ supply is considered balanced. A year ago, there were just 35,000 completed, ready to occupy homes available for sale (not seasonally adjusted). By December 2022, that number increased 117% to 76,000, reflecting flagging demand and more standing inventory due to lower sales. Completed, ready to occupy inventory however remains just 16.5% of total inventory and homes under construction accounts for 62.6 of the inventory. Home that has not started construction when the sales contract is signed accounts for 20.9% of new homes sold in December. The median sales price decreased 3.7% to $442,100 in December but is up 7.8% compared to a year ago due to higher construction costs. The number of entry-level homes priced below $300,000 has been steadily falling in recent years. In 2021, 23% of new home sold were priced below $300,000. That share has now fallen to 10%. In 2022, there were 266,000 homes that were priced above $500,000 compared to 226,000 in 2021. Nationally, on a year-to-year basis, 644,000 new homes were sold in 2022. This is 16.4% below the 2021 level of 771,000. Regionally, on a year-to-year basis, new home sales fell in all four regions, down 8.2% in the Northeast, 22.1% in the Midwest, 13.0% in the South and 23.5% in the West. Related ‹ Economic Growth and Signs of Cooling Inflation End 2022Tags: economics, home building, housing, new home sales, sales, single-family

New Home Sales Uptick in December But Market Weakness Remains2023-01-26T16:25:34-06:00

Staying safe during the Coronavirus pandemic.

2021-05-11T08:19:31-05:00

By Hillwood Communities on July 30, 2020 • As we all continue to navigate the disruptive beast that is the Coronavirus, Hillwood Communities is working diligently to continue to partner with our Realtor community to make the sales process as

Staying safe during the Coronavirus pandemic.2021-05-11T08:19:31-05:00

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