In March, new home sales jumped by 8.8%, according to the latest data from the Census Bureau. The increase in sales of newly built homes was driven by a shortage of used homes, which has forced many people to turn to new construction as a solution. If this trend continues, experts predict that over 693,000 new homes could be sold this year, which would be a significant boost for the housing market.
On the other hand, sales of existing homes have been stagnant due to homeowners holding onto their low fixed mortgage rates despite rising interest rates. This contrasts with the positive trend in new home sales and highlights the confidence of builders in the housing market.
To attract more buyers, high mortgage rates have made buying a house challenging for first-time buyers. However, builders are offering incentives such as price reductions, mortgage rate buy-downs, and covering buyers’ closing costs to help maintain a healthy pace of new home sales. These incentives have proven effective in keeping up with demand for new homes.
While the data on new home sales is encouraging, it should be interpreted with caution due to potential fluctuations and margin of error in the bureau’s figures. Nevertheless, if this trend continues and more people turn to newly built homes as a solution to their housing needs, it could alleviate some of the challenges facing American families and contribute to economic growth.
