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NEW HOMES SHINE IN A SLUGGISH MARKET  Pinterest
In an otherwise slow housing market, new homes are seeing a surge in popularity. Homebuilders experienced a surprising increase in sales last month, thanks in part to a dip in mortgage rates. According to the U.S. Census Bureau, new home sales in July rose by 10.6% compared to June and were up 5.6% year-over-year. This boost was fueled by lower mortgage rates and builders offering incentives to help buyers navigate affordability challenges, explained Lisa Sturtevant, chief economist at Bright MLS. Builders have been using these incentives aggressively, with 64% of them offering concessions, the highest level since April 2019, according to the National Association of Home Builders (NAHB). Despite a slight rise in the median price of new homes to $429,800 in July - higher than May and June but below the March peak of $436,400 - price growth remains constrained. The elevated supply of new homes forces builders to stay competitive, which helps to keep prices in check, noted Odeta Kushi, deputy chief economist at First American. Regional sales trends show the Midwest leading the way with a 22.1% increase year-over-year, followed by the West (up 6.1%) and the Northeast (up 5.4%). However, the South saw a slight decline in new home sales, down 2.4%. While new home sales represent a smaller portion of the overall market compared to existing home sales, which remain sluggish, there is a potential shift on the horizon. If existing home inventory continues to grow, the dynamics of the new home market could change, potentially dampening buyer interest in new builds, according to Sturtevant. Molly Boesel, principal economist at CoreLogic, sees a significant pool of potential buyers waiting for such rate cuts. "There is a lot of pent-up demand from potential homebuyers waiting for that cut to make an offer. Once that happens, sales will begin to move upwards slowly," Boesel predicted.
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