Thursday, April 18, 2024

U.S. HOUSING MARKET PERIL: New Home Sales Fall by Alarming Rate

More and more first-time and first-generation homebuyers are suddenly priced out of the U.S. housing market. 

New home sales declined at a double-digit rate in September, according to a statement that the Washington, D.C.-based National Association of Home Builders (NAHB) published this week. 

NAHB members blamed rising mortgage rates nearing 7 percent along with high construction costs and weakening consumer demand. 

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The U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported that sales of newly built, single-family homes in September fell 10.9 percent to a 603,000 seasonally adjusted annual rate.

NAHB Chief Economist Robert Dietz said new home sales are down 14.3 percent on a year-to-date basis compared to 2021.

“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 do not incorporate cancellations, which according to NAHB survey data have more than doubled compared to a year ago,” according to the NAHB statement.

“New single-family home inventory remained elevated at a 9.2 months’ supply (of varying stages of construction). A measure near a six months’ supply is considered balanced. The count of homes available for sale, 462,000, is up 23.2 percent 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.”

NAHB officials announced last month that a brief decline in mortgage rates helped to boost new home sales in August. But they warned that sales would move downward in the months ahead as mortgage rates had since moved higher. 

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NAHB Chair Jerry Konter at the time urged policymakers to find ways to reduce construction costs that delay home projects and put upward pressure on home prices.  

NAHB members represent more than 140,000 members from the home building, remodeling, property management, subcontracting, design, and housing finance industries. Members said they will construct about 80 percent of the new housing units projected for this year.

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