Despite mortgage rates reaching 7%, new home sales have shown a remarkable uptick, with buyers increasingly turning their attention towards new construction. This shift is attributed to factors such as increased supply and incentives offered by builders, presenting greater opportunities for homebuyers. Let’s delve into the statistics and insights driving this trend.
Key Statistics:
In March, approximately 693,000 new single-family houses were sold, marking an 8.3% increase compared to the previous year.
The median sales price for new homes stood at $430,700, according to the latest report by the U.S. Census Bureau.
Conversely, sales of previously owned homes dropped by 3.7% from March 2023, as reported by the National Association of Realtors.
The current landscape of the housing market is characterized by low supply, high prices, and rising interest rates.
Expert Insights:
Senior economist Nicole Bachaud from Zillow Group emphasizes the allure of new construction due to increased incentives and availability compared to existing homes.
Bachaud notes the “mortgage rate lock-in effect,” which dissuades existing homeowners from selling, contributing to the inventory shortage in the existing homes market.
Matthew Walsh, assistant director and economist at Moody’s Analytics, underscores the flexibility and incentives offered by homebuilders to attract buyers amidst the challenging market conditions.
Walsh highlights a significant narrowing of the price gap between new builds and existing homes, making new construction more appealing to price-sensitive buyers.
Price Parity:
Walsh notes that over the last six months, the median price for a new home has been only about 4% higher than that of an existing house, a notable decrease from the pre-pandemic era.
Previously, the median price of a new home was over 40% higher than that of an existing house, indicating a substantial shift in pricing dynamics favoring buyers in the current market.
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