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

New Home Sales Increase in October

2022-11-23T11:19:34-06:00

By Danushka Nanayakkara-Skillington on November 23, 2022 • New home sales rebounded in October despite higher mortgage rates, likely due to low existing home inventory and builders using incentives to attract buyers to the new home market. The U.S. Department of Housing and Urban Development and the U.S. Census Bureau estimated sales of newly built, single-family homes in October at a 632,000 seasonally adjusted annual pace, which is a 7.5% increase over downwardly revised September rate of 588,000 and is 5.8% below the October 2021 estimate of 671,000. Sales-adjusted inventory levels are at an elevated 8.9 months’ supply in October. However, only 63,000 of the new home inventory is completed and ready to occupy. This count has been increasing in recent months and is up 75.0% compared to a year ago. Homes under construction accounts for 63.8% of the inventory. Moreover, sales are increasingly coming from homes that have not started construction, with that count up 13.7% year-over-year, not seasonally adjusted (NSA). The median sales price increased to $493,000 in October, up 8.2% compared to September and is up 15.4% compared to a year ago. In October there were 23,000 homes that were priced above $500,000 compared to 17,000 a year ago. Nationally, on a year-to-date basis, new home sales are down 14.2% for the first ten months of 2022. Regionally, on a year-to-date basis, new home sales fell in all four regions, down 4.8% in the Northeast, 22.0% in the Midwest, 11.8% in the South, and 17.9% in the West. Related ‹ Small Increase for Missing Middle MultifamilyTags: economics, home building, housing, new home sales, sales, single-family

New Home Sales Increase in October2022-11-23T11:19:34-06:00

New Home Sales Fall Back in September

2022-10-26T19:15:08-05:00

Rising mortgage rates approaching 7% along with declining builder sentiment stemming from stubbornly high construction costs and weakening consumer demand pushed new-home sales down at a double-digit rate in September. Following a brief uptick in August, sales of newly built, single-family homes in September fell 10.9% to a 603,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Builders continue to face lower buyer traffic due to declining affordability conditions as the housing downturn continues. New home sales are down 14.3% on a year-to-date basis compared to 2021. Moreover, sales are now down 1.9% on the same basis compared to 2019 levels that were prior to the Covid-related changes to interest rates. 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 September reading of 603,000 units is the number of homes that would sell if this pace continued for the next 12 months. Notably, the new home sales data does not incorporate cancellations, which according to NAHB survey data have more than doubled compared to a year ago. New single-family home inventory remained elevated at a 9.2 months’ supply (of varying stages of construction). A measure near a 6 months’ supply is considered balanced. The count of homes available for sale, 462,000, is up 23.2% over last year. Of this total, only 56,000 of the new home inventory is completed and ready to occupy. The remaining have not started construction or are currently under construction. Reflecting rising construction costs, the median new home price in August was $470,600, up 13.9% from a year ago. However, NAHB surveys indicate that a quarter of builders are now cutting prices, thus recent months’ price data reflects a composition change, with sales lost at the low end of the market pushing the median price higher. In September 2022, there were 20,000 sales priced below $300,000. In September 2021, sales in this price range totaled only 6,000. Regionally, on a year-to-date basis, new home sales fell in all four regions, down 8.1% in the Northeast, 21.2% in the Midwest, 12.1% in the South and 17.6% in the West. Related ‹ More Buyers Taking a Look at New ConstructionTags: economics, home building, housing, sales, single-family

New Home Sales Fall Back in September2022-10-26T19:15:08-05:00

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