Housing developers to compete on housing policies

A report from the Wall Street Journal. “Americans purchased fewer new homes in May. Purchases of newly built single-family homes decreased 7.8% to a seasonally adjusted annual rate of 626,000 in May, the Commerce Department said Tuesday. It was the slowest pace of sales since December. The monthly decline was driven by an unusually large decrease in sales in the West.”

“Tuesday’s report showed the number of new homes for sale in May would last 6.4 months at the recent pace. That is up from 5.6 months a year earlier. The median sales price of a new home in May was $308,000, down from $316,700 a year earlier. But lower prices and more supply didn’t stoke better demand last month.”

From CNBC. “The decline in sales came even as home shoppers were watching mortgage rates fall. The average rate on the popular 30-year fixed mortgage started May at 4.29%, according to Mortgage News Daily, and then ended the month at 3.94%, a sizable savings on a monthly payment, especially given higher home prices.”

“‘The lower mortgage rates haven’t unleashed a new wave of demand,’ said Buck Horne, homebuilding analyst at Raymond James.”

“Horne pointed to rising competition from the increasing supply of existing homes for sale, especially in the markets where builders are most active. Supply of existing homes for sale is up a striking 85% in Las Vegas annually, 52% in Seattle and 21% in Dallas, according to Horne. Supply in Southern California is also up in double digits.”

“‘It’s harder for the builders to compete against resale inventory that is priced significantly below where their asking price is now,’ added Horne.”

“The median price of a newly built home sold in May was $308,000, down 2.7% annually. Builders are not necessarily lowering base prices, but they are offering more incentives; the drop in median price is likely due to a shift in the mix of homes selling. The share of homes sold in the $200,000 to $299,999 category increased in May. More buyers on the lower end would shift the median down.”

“The available supply of newly built homes also rose markedly in May to 6.4 months’ worth at the current sales pace. In contrast, the supply of existing homes for sale was at 4.3 months at the end of May.”

Leave a Reply

Your email address will not be published. Required fields are marked *