New US Home Sales Jump to Highest Level Since September

[BumRushDaShow]

Source: Bloomberg

April 23, 2024 at 10:03 AM EDT
Updated on April 23, 2024 at 10:13 AM EDT


Sales of new homes in the US bounced back in March in a broad advance as prospective buyers toughed out high mortgage rates. New single-family home sales increased 8.8% to a 693,000 annual pace last month, the fastest since September, government data showed Tuesday. Economists surveyed by Bloomberg gave a median estimate of 668,000.

The figures indicate that sales have somewhat stabilized in recent months, though the data are volatile. Underlying demand remains strong, but buyers are still constrained by high mortgage rates and prices, which are limiting the extent to which the housing market can gain momentum.

Inflation has proved stubborn in recent months, calling into question not only when the Federal Reserve will cut interest rates in 2024, but if it will at all. Mortgage rates above 7% continue to plague existing-home sales, which are “stuck,” National Association of Realtors Chief Economist Lawrence Yun said last week.

While the resale market is struggling with a lack of inventory, builders are stepping in to fill the void. The supply of new homes for purchase rose to 477,000 in the month, the highest since 2008.

Read more: https://www.bloomberg.com/news/articles/2024-04-23/new-us-home-sales-jump-to-highest-level-since-september?srnd=homepage-americas

[RussBLib]

1. People still need homes

...regardless of the interest rates.

I remember when my wife and I first got married in the early '80's. We signed up for a 21% interest rate. When rates started falling, we kept refinancing and finally got it down to around 12%, and we thought that was great.

Pent-up demand stays pent-up only for awhile.

https://russblib.blogspot.com/?m=1

[IronLionZion]

2. I see plenty of construction in some areas

in my urban area it's condos/apartments. People need to live somewhere. The ones who wanted houses tend to buy pretty far out into the country and work remote as much as they can. They try to balance affordability with avoiding school districts that burn books. Housing is cheaper in MAGA areas but the downside are the MAGA people.

[ScratchCat]

3. This is easily explained

The bulk of new construction homes are at a price level that only 15% to 20% of Americans can afford today. People who live in this income range have plenty of money to spend and builders are willing to take it for a six figure profit.

[CousinIT]

4. True. They're building like mad where I live. Houses, remodels, apartments.

And the home prices are MINIMUM $400K and only up from there. I suppose people from San Francisco and NY think it's cheap. Good side: my home is worth more but my taxes will go UP. Bad news: I can't sell and buy a newer home that's paid off because of prices and interest.

[IronLionZion]

5. Our system benefits those with money in even unexpected ways

as in well capitalized folks also have an easier time qualifying for mortgages if they have higher credit score. Having the ability to submit simple clean offers really muscles out folks who can also afford the same property at the same price/payment but have a more complex and risky mortgage and credit history. Existing home owners with equity can muscle out first time home buyers who don't.

The mortgage backed securities market is far more likely to buy mortgages originated from people who are lowest risk. So that opens up tons of financing opportunities for people who need it the least.

US tax policy explicitly promotes home ownership in many ways. The best known way is the mortgage interest deduction.

Meanwhile, the rent is punishingly high in most markets as landlords take advantage of the housing shortage.

There is tons of money to be made by screwing folks who don't have as much money.

[melm00se]

6. I live in SW FL

between Sarasota and Ft Myers.

Construction is popping up everywhere. If there is open land, building has commenced, it is planned or landowners are soliciting purchasing inquiries.

The thing that concerns me the most is that a lot of the construction is for rental units as opposed to owner/occupied. Once a neighborhood has the majority of rentals, it is extremely rare for it to swing back to owner/occupied.

[BumRushDaShow]

7. Could be they are planning for an influx

of seasonal retirees and seasonal workers.

[melm00se]

8. That ship has already sailed

we are the fricking snowbird capital of Florida's west coast.

[BumRushDaShow]

9. But for some reason

people are still going down there (and that includes the Canadian snowbirds), although I have seen recent articles where that may have slowed - in some cases due to the issues of getting property insurance.

[melm00se]

11. The biggest issues

facing FL residents are:

Insurance

Property insurance, for many, has grown between 50-100% in very short order. Automobile insurance is not much better. Getting hit with major hurricanes in successive years (it was not so long ago that Florida hadn't seen a major hurricane for more than 10 years) can really do a number on premiums.

Home/Condo association reserves

Many people in FL live under some sort of association which carries association fees (essentially private taxation). Since the collapse of Surfside, the FL legislature passed legislation requiring associations fully fund their reserves for things like maintenance. This has caused association dues increase dramatically far surpassing inflation. As many homeowners in FL are retirees, many cannot afford the jump in costs.

Increasing housing costs

With the combination of increasing insurance costs, association fees, interest rates, housing costs and the growth in retirees, the availability of low to moderate priced housing is disappearing. If you are retired and buying with cash, not a big issue. If, however, you are younger? You may find that you cannot afford to live close to your job and face a significant commute. It gets to the point of "Why live here? I can move to another state and enjoy lower costs and shorter commutes".

[BumRushDaShow]

12. What you describe seems to be happening in many locations

And I'm at the point of believing that this obsession with "luxury homes" (despite their claim that it is "more cost effective" for them to build those, a similar idiotic argument that the car companies have made regarding why they insisted on manufacturing the massive SUVs), is for future money laundering purposes.

[pfitz59]

10. My neighborhood is 'built-out'.

Only way to build is up, and that isn't happening. So, prices keep going up, and inventory of available homes for sale stays low. Great for me, bad for folks seeking what I and my neighbors have (safe, established homes with good schools and mature landscaping).