New-home sales in the U.S. exceeded expectations in September, rising 12.3% to a seasonally adjusted annual rate of 759,000, according to HousingWire. Despite high mortgage rates, a drop in builder confidence, and declining mortgage applications, new-home sales surged by 33.9% year over year in September.
The National Association of Home Builders attributes this surge to a lack of existing inventory but expects the housing market to slow as affordability challenges persist due to high interest rates. Median new-home prices declined by 3.3% in September, and builders are making adjustments to enhance sales, including offering incentives and constructing smaller, more affordable homes.
According to Alicia Huey, chairman of the National Association of Home Builders (NAHB), the lack of existing inventory is the reason why more homebuyers turn to new construction. However, she expects the housing market to slow in the coming months as affordability headwinds persist.
“Higher interest rates not only raise the cost of housing for buyers, but for builders as well because of increased costs for financing construction loans,” she added.
Advertisement
Related Stories
Housing Markets
10 Biggest Publicly Traded Home Builders Undeterred by High Mortgage Rates
Together, the 10 biggest builders recorded 77,255 new homes in Q1 2024, an increase of more than 18% from Q1 2023
Economics
Mortgage Rate Declines Could Boost Home Sales Following Months of Low Activity
Encouraging economic news bumped mortgage applications up by 2.6% for the week ending May 3
Affordability
NAHB Announces Plan to Address the Housing Affordability Crisis
The National Association of Home Builders has outlined a 10-step plan that would increase the supply of single-family and multifamily for-sale and for-rent housing
