August new home sales came in better than expected. The Census Bureau reported new home sales of August at a seasonally adjusted annual rate (SAAR) of 685,000 units. Previous months were revised slightly higher.
“New Home Sales Sales of new single‐family houses in August 2022 were at a seasonally adjusted annual rate of 685,000, according to
estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 28.8 percent (±18.3 percent) above the revised July rate of 532,000, but is 0.1 percent (±16.5 percent)* below the August 2021 estimate of 686,000…
The median sales price of new houses sold in August 2022 was $436,800. The average sales price was $521,800. The seasonally‐adjusted estimate of new houses for sale at the end of August was 461,000. This represents a supply of 8.1 months at the current sales rate.”
New home sales likely benefitted from a short-term reprieve in rates during August. There’s also a seasonality component to consider. The end of the summer is often a make-or-break moment for prospective home buyers. Some probably just decided to go with it. Both median and average new home prices posted a sharp drop in August, so that likely improved the affordability picture somewhat.
Unadjusted figures for new home inventory show 467,000 homes for sale at the end of the period. That’s the highest total so far this year, and the highest inventory of new construction since 2008.
Median new home prices in North Texas are still up 19 percent year-over year. New construction prices in Denton County have fallen more quickly from the July peak. Median new home prices in Denton County were up 12.4% in August, but the price gains are fading.
With mortgage rates now at 7 percent, those year-over-year price gains will keep shrinking. A 30-year fixed rate mortgage hit 7.08 percent today according to Mortgage News Daily. We are now experiencing the highest mortgage rates since 2002. Home prices were a lot cheaper back then. We’re seeing more homes come back to market with contract cancellations in recent weeks. Not exactly surprising considering affordability has been absolutely hammered.
There are now actual move-in ready homes from builders complete with price reductions and thousands in incentives. Competition and inventory are slowly working their way back to the housing market as the Federal Reserve pushes for a reset. It has been a pretty dramatic shift since the beginning of the year when there was virtually no inventory in sight. The Fed keeps tightening the screws on liquidity. That will continue to impact housing demand and home prices.
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