Saturday, May 18, 2024

New Home Sales Down by a Distressing Percentage

New home sales are down 29.6 percent from a year ago. 

This, according to newly released data that the Washington, D.C.-based National Association of Homebuilders (NAHB) published this week.

In a series of statements, NAHB members warned that the nation’s housing market continues to weaken. New home sales fell in July to their lowest level since January 2016. 

“The median sales price rose to $439,400 in July, up 5.9 percent compared to June, and is up 8.2 percent compared to a year ago,” NAHB said in a statement this week.

“Regionally, on a year-to-date basis, new home sales fell in all four regions, down 14.9 percent in the Northeast, 26.5 percent in the Midwest, 13.4 percent in the South, and 15.7 percent in the West.” 

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NAHB Chair Jerry Konter blamed elevated mortgage rates and higher construction costs for pushing more consumers out of the market, particularly entry-level buyers. The industry also continues to grapple with supply chain disruptions.

Last week, NAHB members reported the following:

• Builder confidence in the market for newly built single-family homes fell six points in August to 49, marking the first time since May 2020 that the index fell below the key break-even measure of 50.

• Roughly one-in-five (19 percent) home builders in one survey reported they had to reduce prices during the past month to increase sales or limit cancellations. 

• The August buyer traffic number in one NAHB builder survey was 32, the lowest level since April 2014 except for the spring of 2020 when the COVID-19 pandemic first hit.

Earlier this month, Konter said that the so-called Inflation Reduction Act would not ease any inflationary pressures upon America’s housing market. He predicted it would actually “exacerbate the nation’s housing affordability crisis.”

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Housing costs account for 40 percent of the Consumer Price Index. Konter warned that the Inflation Reduction Act will change several of the nation’s real estate and building and energy code requirements. Those changes, he went on to say, will increase housing costs even more.

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