Welcome to today’s coverage on the latest trends and shifts in the real estate market. From the surge in new-home sales driven by builder incentives and a shortage of existing homes, to the impact of new nationwide building codes on housing affordability, our updates span a range of crucial topics. Whether you’re interested in the economic indicators, market predictions for 2024, or the effects of rising mortgage rates, we have gathered insightful articles to keep you informed and ahead in the real estate landscape. Dive into our comprehensive analysis and expert opinions to better understand how these developments might affect your real estate decisions.
New-Home Sales Climb as Builder Incentives Pay Off
Sales of newly built single-family homes jumped nearly 9% in March, reaching their highest level since last fall, according to the Commerce Department. With limited inventory options in the resale market, more buyers are turning to new construction. Home builders are offering incentives such as price reductions, closing cost credits, and mortgage rate buy-downs, making homes more affordable. The median sales price of a new home in March was $430,700, compared to $393,500 for existing-home sales. Builders are introducing smaller homes to bring prices within reach of more buyers. Lower mortgage rates expected in the second half of the year may lead to stronger new-home sales. However, construction on new homes dropped by 12.4% in March, and permits fell to a five-month low, potentially limiting options for buyers. Higher interest rates are increasing costs for both buyers and builders. Despite the recent rise in mortgage rates, new-home sales data does not reflect this change. Sales of existing homes fell 4.3% in March compared to February. Housing analysts predict a decline in new-home sales next month as factors like the shortage of existing homes, completions of new homes, and incentives begin to fade.
New Residential Sales Press Release
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New Nationwide Codes Mandate a Major Blow to Housing Affordability | NAHB
Carl Harris, chairman of the National Association of Home Builders (NAHB), expressed concern after the Biden administration announced that the U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture (USDA) will only insure mortgages for new homes built to the 2021 International Energy Conservation Code (IECC). Harris argues that this rule, implemented without adequate review, will do little to reduce overall energy use but will worsen the housing affordability crisis. Studies show that building to the 2021 IECC can add up to $31,000 to the price of a new home, taking up to 90 years for a buyer to recoup the added cost. This mandate contradicts the administration’s goal of building 2 million additional homes and will raise housing costs, particularly in the entry-level market and affordable rental properties, limiting access to mortgage financing.
New Home Sales Post Solid Gains in March | Florida Realtors
Sales of newly built single-family homes saw a significant increase in March, rising 8.8% compared to February and 8.3% from the previous year. Limited inventory of existing homes contributed to this growth. However, the pace of new home sales may be impacted in April as mortgage rates have surpassed 7%, which is expected to moderate sales and lead to increased builder sales incentives this spring. The median sale price for new homes in March was $430,700, up nearly 6% from February but down 1.9% from the previous year. The ongoing shortage of resale homes has supported the current building pace, with new single-family home inventory remaining elevated at 477,000 units. Despite higher interest rates affecting consumer demand, builders continue to supply new homes to compensate for low resale supply. The Northeast, Midwest, and West regions have experienced positive year-to-date growth in new home sales, while the South has seen a decline.
Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again? – Forbes Advisor
As the housing market enters its peak season, signs of life are emerging. However, high mortgage rates, soaring home prices, and limited housing stock continue to hinder affordability for many prospective buyers. The National Association of Realtors (NAR) has agreed to a $418 million settlement that will bring significant changes to broker commissions, potentially disrupting the buying and selling model. Experts predict that the housing market will continue to face affordability challenges due to high home prices and elevated interest rates in 2024. While Fannie Mae forecasts an increase in home sales transactions compared to last year, the rise in home prices is expected to be slower. The latest data shows that U.S. home prices declined in January for the third consecutive month, but year-over-year prices increased by 6%. To achieve a housing recovery, experts suggest an increase in housing supply and a gradual decrease in mortgage rates. Despite ongoing hurdles, some experts remain optimistic about a housing market recovery this year. However, the impact of the NAR settlement and the availability of affordable homes for first-time buyers remain concerns. Foreclosure activity has seen slight increases, but experts do not anticipate a wave of foreclosures in 2024. Buying a home is a personal decision, and experts advise considering one’s financial position rather than trying to time the market. Declining mortgage rates may incentivize buyers, but the tight housing supply could lead to higher prices. While a housing market crash is not expected, affordability remains a significant challenge for first-time homebuyers.