In March, there was an uptick in the sale of newly constructed homes, accompanied by a rebound in prices from the previous month’s decline.
The sale of new single-family homes surged to a seasonally adjusted annual rate of 693,000 for the month, which is an increase from the revised February figure of 637,000, as per a joint report from the Census Bureau and the Department of Housing and Urban Development made public on Tuesday.
Simultaneously, home prices experienced an uptick, with the median price for a new home climbing to $430,700, up from $400,500 in the preceding month. Sales were observed to have gone up across all geographical regions within the country, with the Southern region showing the most significant growth, a region that is historically known for its robust new construction market.
Gregg Logan from RCLCO Real Estate Consulting commented, “Even though home prices and mortgage rates are on the higher side, the pace of price increases has been slowing down. Homebuilders are also catering to a wider audience by introducing a variety of more modestly-sized homes, making the prices more accessible for potential buyers. We anticipate this trend to persist as mortgage rates are expected to decrease later in the year.”
The housing market is currently grappling with issues related to elevated housing prices and mortgage rates, coupled with a scarcity of existing homes on the market. Despite an increase in the listings of previously owned homes, this has occurred in tandem with an uptick in mortgage rates.
To stimulate sales, new home construction companies have been providing incentives such as mortgage rate reductions and offers on additional features to sweeten the deal. After reaching a high point in the fall, mortgage rates have experienced a slight drop at the start of the year, only to begin climbing again as inflation projections have surpassed expectations, currently averaging around 7.5% for the standard 30-year fixed-rate mortgage.
Lisa Sturtevant, the chief economist at Bright MLS, noted, “The market for new homes has constituted a significant portion of the total housing stock, which has enabled homebuilders to draw in prospective buyers who are facing a constrained supply in the market for existing homes. Many builders have adapted their approach to align with demand by constructing smaller homes. Additionally, numerous homebuilders are providing incentives and mortgage rate reductions to make purchasing a new home more enticing.”
