New-Home Sales Rise as Existing Housing Inventory Dries Up
A lack of existing housing inventory is pushing a growing number of homebuyers into the new-home market, signaling a year of strong sales ahead for home builders. New-home sales rose 4.1% nationwide to an annual rate of 683,000 in April, up from a revised 656,000 the month prior, Realtor.com reports.
Though new-home inventory remains historically low, builders are currently constructing new homes at the highest level since March 2022, and experts say that increased activity could be key to lowering home prices in 2023 and beyond.
Move over, high mortgage rates—low inventory is strangling the housing market, as buyers have few options. Builder confidence is high as homeowners feel compelled to wait and hold on to ultra-low mortgage rates they refinanced into during the pandemic.
Builders have gotten an edge over existing homeowners who are selling by offering incentives from mortgage rate buydowns to other freebies, but it’s unclear how long that will last. The builders’ industry group reported earlier this month that the share of builders reducing home prices fell to 27% in May, from 30% in April.