Still, overall prospects remain strong
New-home sales across the US dipped in August, but market prospects remain positive with demand expected to jump in the closing months of 2024.
Government data released Wednesday showed sales of new homes dropped by 4.7% last month compared with July, hitting a seasonally adjusted annual rate of 716,000 units as the pace of July activity was revised upwards to 751,000 units.
Despite that milder activity, new home sales in August came in higher than economists surveyed by Reuters had expected – and the new-home market remains a “bright spot” in the overall housing outlook, according to First American deputy chief economist Odeta Kushi.
She noted improving homebuilder sentiment on the new-home sales front as cause for optimism, in sharp contrast to an existing-home market that’s unlikely to shift quickly from its current torpor. “The long-term housing shortage, lower mortgage rates, and builders’ ability to offer incentives will help to buoy new single-family sales,” she said.
While the so-called “Five Ls” – labor, lots, legal issues, lumber, and lending – are posing challenges for builders, “the new-home market will likely continue to outperform the existing-home market over the near term,” Kushi said, “because, unlike existing homeowners, builders are not rate-locked-in.”
Sliding mortgage rates in recent weeks have spurred hopes of a housing market revival before the end of the year, with a 50-basis-point reduction last week by the Federal Reserve also suggesting an end to the days of climbing rates.
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