VOL 2023 ISSUE 11
Elevated mortgage rates that averaged 7.62 % in October per Freddie Mac , the highest rate since 2000 , depressed buyer demand and pushed down new home sales in October .
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VOL 2023 ISSUE 11
BUILDERSOUTLOOK
PUBLISHED BY THE EL PASO ASSOCIATION OF BUILDERS : NATIONAL , STATE AND LOCAL HOME BUILDING INDUSTRY NEWS
New Home Sales Weaken in October
NAHB
Elevated mortgage rates that averaged 7.62 % in October per Freddie Mac , the highest rate since 2000 , depressed buyer demand and pushed down new home sales in October .
Sales of newly built , single-family homes in October fell 5.6 % to a 679,000 seasonally adjusted annual rate , following a notable downward revision in September , according to newly released data by the U . S . Department of Housing and Urban Development and the U . S . Census Bureau . The pace of new home sales in October was up 17.7 % from a year ago . “ New home sales fell back in October as interest rates moved higher ,” said Alicia Huey , chairman of the National Association of Home Builders ( NAHB ) and a custom home builder and developer from
Birmingham , Ala . “ Despite the challenging conditions , sales are up 4.6 % on a year-to-date basis due to a lack of inventory in the resale market .”
“ Median new home prices have moved lower as new home size has decreased in 2023 ,” said NAHB Chief Economist Robert Dietz . “ Combined with sales incentives and a lack of resale inventory , demand has remained solid in 2023 and should improve in 2024 as interest rates move lower .”
A new home sale occurs when a sales contract is signed or a deposit is accepted . The home can be in any stage of construction : not yet started , under construction or completed . In addition to adjusting for seasonal effects , the October reading of 679,000 units is the number of homes that would sell if this pace continued for the next 12 months .
New single-family home inventory in October increased to the highest level since January , up 8.3 % from the previous month , to 439,000 . This represents a 7.8 months ’ supply at the current building pace . A measure near a 6 months ’ supply is considered balanced . Of total inventory , including new and existing homes , newly-built homes made up 30 % of all singlefamily homes available for sale in October – compared to a 12 % historical average .
The median new home sale price in October was $ 409,300 , down 3.1 % from September , and down 17.6 % compared to a year ago . Pricing is down both due to builder incentive use and a shift towards building slightly smaller homes . As a result , 33 % of sales were priced between $ 300,000 to less than $ 400,000 , compared to a year ago when just 20 % of sales were in that range .
Regionally , on a year-to-date basis , new home sales are up 9.5 % in the Northeast , 5.8 % in the South and 2.5 % in the West , while sales are down 0.3 % in the Midwest .