What’s driving today’s real estate trends? Driven by low home inventory, new home sales are hot, with sales rising 6.7% in May despite extraordinarily high selling prices. This tops the far more conservative estimate of a 0.9% increase expected by economists at the Wall Street Journal.
Have We Surpassed Elevated Levels Seen Before the 07-09 Mortgage Crisis?
New home sales still remain well beyond such levels, and are up 14.1% compared to new home sales last May.
What Areas are Seeing the Greatest Growth?
Sales in the South are driving last month’s numbers, with the region experiencing a 17.9% increase in new home sales. Elsewhere in the Midwest, May sales were flat, and in the Northeast and Northwest, new home sales declined.
Will this Trend in New Home Sales Continue?
Expectations of single-family home sales by builders fell two-points in June according to the recent NAHB housing market index. Further economic growth, the creation of more jobs, and a solid housing demand, however, are expected to spur construction of more single-family homes in the months ahead.
What About Pre-Owned Homes?
Compared to sales in the first 4-5 months last year, 2018 sales of pre-owned homes have remained neutral.
How are Complications in the Sales Arena Playing a Role?
It’s commonly seen in real estate trends for low inventory to inflate prices, driving buyers out of the market, and we’ve been seeing that for quite some time now. But this isn’t the only factor complicating purchases. Mortgage interest rates rose to 4.59% in May, up more than half a point from January’s 4.03%. Labor is scarce, and lumber prices at record-highs, adding almost $9,000 to the cost of new single family homes since January of 2017. All-in-all, a harrowing time for making a home purchase.
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