New home sales climb in July despite steep mortgage rates
Sales of new U.S. homes rose 4.4% in July, surpassing expectations, as buyers turn to new construction due to a lack of resale inventory despite high mortgage rates and increased prices.
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Posted 8/23/2023, 5:24:01 PM
foxbusiness.com
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Canada's housing market is seeing a surge in new listings, with a 5.6% increase in July, indicating a possible shift in sentiment among homeowners, while home sales have declined due to higher mortgage costs and interest rates. However, prices continue to rise, although at a slower pace.
US home prices are rising again after five months of declines, reaching a record high for the month of July, due to low inventory and homeowners refusing to sell amidst high mortgage rates.
Mortgage rates have risen for the fourth consecutive week, reaching their highest levels since 2000, leading to decreased demand for home-purchase mortgages and a stagnant housing market.
Mortgage rates topping 7% have led to a significant drop in mortgage applications for home purchases, with last week seeing the smallest volume in 28 years. The increase in rates, driven by concerns of high inflation, has priced out many potential buyers and contributed to low housing supply and high home prices. As a result, sales of previously owned homes have declined, and homeowners are reluctant to sell their properties due to the higher rates. Some buyers are turning to adjustable-rate mortgages to manage the increased costs.
The strong job market and rising wages are creating eager buyers in the housing market, making it a great time to sell your house.
The inventory of existing homes has been declining since the peak of the housing bubble in July 2007, with technology playing a key role in speeding up the processes involved in selling a home and reducing the time it takes for a home to sit in inventory.
Sales of existing homes have declined due to the rise in mortgage rates, but the demand for new homes is increasing as buyers are hesitant to sell their current homes with low-interest mortgages.
Demand for single-family homes remains high in Maine, with a 7.34 percent increase in prices for July 2023 compared to last year, reaching a median sales price of $380,000, while the number of sales decreased 20.93 percent; nationally, sales decreased by 16.3 percent over the same period, but the median sales price increased by 1.6 percent to $412,300.
The average U.S. home price has increased by 2.6% to $382,000 due to a lack of inventory, which has dropped more than demand, and significant declines in home prices have been seen in areas such as Austin, Detroit, and Phoenix, according to an analysis by Redfin.
Homebuyers' purchasing power has been negatively impacted by rising mortgage rates, which averaged 7.2% in August, the highest level since 2001, resulting in a decline in existing home sales and a shift towards new-construction homes.
The average long-term mortgage rate in the US climbed above 7%, reaching its highest level since 2001, making it more difficult for homebuyers to afford rising home prices and exacerbating the low supply of properties on the market.
Zillow predicts that US home prices will continue to rise, with a 6.5% increase over the next 12 months, driven by tight inventory levels and high demand, while other firms like Moody's Analytics and Morgan Stanley believe there may be a decline in home prices by the end of 2024.
Pending home sales in the Seattle area have slightly increased this summer but remain close to recent lows, according to a report by Redfin.
Home prices in the U.S. rose for the fifth consecutive month in June, despite high mortgage rates, with national prices increasing by 0.9% and only down 0.02% from their peak in June 2022, according to the S&P CoreLogic Case-Shiller index. However, there were significant regional differences, with cities on the West Coast experiencing some of the biggest declines. The housing market continues to face challenges due to low inventory and slow new construction.
Home prices in the US have continued to rise for the fifth consecutive month, reaching near all-time highs, although high mortgage rates could impact further price gains for the rest of the year. Cities in the Midwest and New England saw the most notable price acceleration, while cities in the West experienced year-over-year price drops. Low inventory remains a challenge, with few homeowners wanting to sell, leading to higher prices and increased competition for available homes. In contrast, the rental market is offering more affordability as rental inventory increases.
Buyers of newly built homes are enjoying lower mortgage rates, as home builders are allocating a portion of the sale proceeds to permanently buy down the rates, leading to higher new home sales.
Pending home sales in the US rose by 0.9% in July, marking the second consecutive month of growth, despite high prices and increasing mortgage rates, with the rise attributed to an expanding job market and the potential for further increases given the number of failed offers; however, year-over-year pending transactions fell by 14%.
In August, the number of homes actively for sale decreased by 7.9% compared to the previous year, while the total number of unsold homes, including those under contract, decreased by 9.2%.
British home prices are expected to fall by 4% this year due to high interest rates and living costs, despite the shortage of supply, according to a Reuters poll, with potential buyers being kept out of the property market; however, prices are expected to recover from 2024.
Home prices in the US hit another all-time high in July, but month-to-month gains weakened and suggest a potential slowdown, likely due to rising mortgage rates and increased listings.
The housing market is entering its slow season and home sales may be impacted by high mortgage rates, but home builder stocks could remain strong.
Average 30-year mortgage rates are still elevated at 6.94% in August, but they are expected to come down by the end of the year; however, a significant drop that will boost homebuying demand is not likely until 2024 or 2025, but there are advantages to buying a home even when rates are high, such as less competition.
New home sales in Beijing have increased by 16.9% in the week of September 4-10, indicating that government efforts to revive the property sector are having an impact in the Chinese capital. However, the rebound in sales is not reflected across the rest of China, with sales falling 20% on average nationwide.
Mortgage payments in the US have reached a record high due to high mortgage rates and increasing home prices, causing pending home sales to decline by 12% year over year and pushing some buyers to the sidelines; however, sellers can still expect fair prices due to low inventory.
Retail sales in the US rose 0.6% in August compared to July, but the increase in gas prices could impact consumer spending during the holiday shopping season, according to a report from the Commerce Department. Excluding gas sales, retail sales only increased by 0.2% in August.
The median sales price for single-family homes in the state has increased by 271% since 2010, according to The Warren Group.
Home prices in California reached a 15-month high in August 2023, attributed to rising mortgage rates and a shortage of homes on the market, but the market is expected to improve in the last quarter of the year as interest rates ease, according to the California Association of Realtors.
U.S. homebuilding fell to a three-year low in August due to higher mortgage rates, but permits for new construction increased, signaling support from a shortage of homes on the market.
U.S. home price growth increased to 2.5% year-over-year in July, with Miami, St. Louis, and Detroit driving the growth, while 11 states saw annual home price declines, according to CoreLogic's latest home price index data. Rising mortgage rates and a lack of inventory are putting pressure on potential homebuyers, and pending home sales have seen slight upticks, particularly in the West and South regions.
Zillow economists have revised their forecast for U.S. home prices, predicting a 4.9% increase over the next 12 months due to higher mortgage rates and a slight decrease in market tightness.
Despite a recent slump, research firms including Freddie Mac, Zillow, and the National Association of Realtors predict that home prices will continue to rise in 2024 due to a shortage of housing inventory and strong demand, with NAR forecasting a 2.6% increase. However, Moody's Analytics and Morgan Stanley expect home prices to slightly decrease in 2024 due to declining affordability and increased housing supply.
Home prices continued to rise in August due to low inventory and high mortgage rates, causing a drop in home sales, according to a report from the National Association of Realtors.
The United States housing market has seen a 21 percent decline in previously occupied home sales over the past year, continuing the slowdown caused by rising interest rates, while prices continue to rise despite the decrease in sales, leading to a shortage of affordable homes and worsening home affordability for the foreseeable future.
Sales of previously owned homes in the US fell for the third consecutive month in August, as higher mortgage rates, rising prices, and a lack of available properties have limited homebuyers' options.
Sales of previously owned homes fell 0.7% in August from July, with high mortgage rates and tight supply impacting potential buyers.
Home sales in the American Midwest defied the national trend by increasing in August, while sales across the country declined, due to high mortgage rates and low supply, according to data from the National Association of Realtors. Overall, home sales decreased by 0.7% in August and over 15% from the previous year, but analysts noted a stabilization in the market. The Midwest saw a 1% increase in home sales compared to July, but a more than 16% decline compared to the previous year.