For today’s homebuyers, 1 out of 3 potential listings is new construction. Historically, new homes only make up 1 out of 10 for-sale listings.
NEW YORK – Home builders are enjoying stronger-than-expected business this spring due to the shortage of existing homes for sale and the recent fall in mortgage rates.
Newly built homes made up about one-third of single-family homes for sale in March, according to data from the Commerce Department and the National Association of Realtors – and the proportion of newly built homes reached nearly 35% in December, a record in data going back to mid-1982, and up from a historical norm of 10% to 20%.
“The builders aren’t the only game in town, but they’re more the only game in town than they have been in a very long time,” says Carl Reichardt, a home-building analyst at BTIG.
Buyers are also more comfortable committing to a purchase now that mortgage rates have declined from the 20-year highs they hit in the fall, topping 7%.
“The consumer has really adjusted to this new rate environment,” says Sheryl Palmer, chief executive of builder Taylor Morrison Home. “They no longer believe that rates are going to return to 3% or 4%.”
This year’s improved backdrop helped new single-family home sales rise 9.6% in March from the prior month on a seasonally adjusted basis.
“Because inventory is very tight and remained very tight, it’s very easy to move from a fear of buying at the top to a fear of missing out,” says Stephen Kim, a home-building analyst at Evercore ISI.
Source: Wall Street Journal (05/02/23) Friedman, Nicole
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