Posted on 11/23/2022 11:38:29 AM PST by ChicagoConservative27
New home sales jumped last month despite consistently high mortgage rates that experts say have hampered affordability and pushed potential buyers out of the market.
Sales of new single-family homes rose by 7.5 percent in October at a seasonally adjusted annual rate of 632,000, according to Census Bureau data released on Wednesday.
But the new sales fell behind the October 2021 estimate by 5.8 percent.
The median sales price of new single-family homes sold in October was $493,000, while the average sales price was $544,000.
New sales numbers follow separate data released last week that shows existing home sales declining for the ninth straight month.
Existing home sales in October declined by 5.9 percent from September and by more than 28 percent from a year earlier, according to data from the National Association of Realtors.
(Excerpt) Read more at thehill.com ...
So how is this good news??
It would seem to me that higher interest rates would make it more difficult for new/first time buyers to qualify, which would cool the market, helping keep prices from going up. For those that can qualify to get in, and can afford the higher interest rate (which they can refinance later), would seem like as good a time as any to buy in. But I dont know squat about economics and I am locked in at 2%.
There are extreme structural problems to the economy and they will not be resolved overnight. A realistic view of any economic report needs to be put into context with time and other things happening in the economy. Consider the impact of getting a mortgage this year compared to two years ago. Prices are inflated. Interest rates are higher. Buying power is down. Bottom line: people are get less for more dollars. Look at principal payments on a mortgage schedule. You ain’t owning nothing and you are paying more for it. Of course, you might be able to refinance in a couple of years if interest rates come done and you still have one of those little things called a job.
We’re at the beginning of a decade of malaise. Look for parallels to the 1970’s.
It’s just news. We are in a housing shortage, so houses are selling. Everybody keeps ignoring supply and demand because the media only talks blood in the water.
It’s not good news.
Many... (Most?) new home builders are giving away huge incentives to purchase new houses. Those incentives include HOA fees covered for a year or more, X number of months of no payments, closing fees paid, or extras thrown on like a spa, covered patio or deck, etc.
I deal with the insurance side of things and this is what I’m seeing.
The majority of new build homes on the market now broke ground 6-12 months ago, which was before rates shot up. In order to move the stock you have to offer the extras that an existing home can’t. Either way, it’s not good news since the builders are cutting their profits back by huge amounts and many will not be able to continue building after paying off the loans they have.
The depression hasn’t started, yet.
Part of what is happening this year is the competition for the cash buyer. There are still some cash buyers or others unaffected by the higher interest rates and they have to have a house when you need one. If you are selling you want to get snapped up by one of those buyers without cutting your base price.
Good post.
That is why “price” data can be very misleading.
Rents have the same issue—in declining markets months of free rent or other extras are thrown in—so the stated rent is not the real rent.
Lumber futures are in the range where they were back in the mid to late 90s and certainly back where they were in ‘17 and ‘18 but the price at the lumber yard has not gone down accordingly and probably won’t. Somebody is taking home a lot of loot.
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