August 2023: New Home Sales
In August 2023, new home sales in the United States reached an estimated annual rate of 675,000, showing an 8.7% decrease from the revised rate in July, which was 739,000. However, this rate was still 5.8% higher compared to August 2022, which had an estimated rate of 638,000.
The median sales price for these new homes sold in August 2023 was $430,300, while the average sales price was $514,000. Furthermore, at the end of August, approximately 436,000 new houses were available for sale, indicating a supply of 7.8 months based on the current sales rate. These figures provide insights into the dynamics of the housing market, with fluctuating sales rates and price variations.
2023 Housing Market Predictions: Home Price Affordability Timeline
The housing market continues to grapple with low inventory, especially in the entry-level segment, which has driven demand and sustained higher home prices. New single-family homes have partly addressed this shortage, attracting frustrated buyers looking for alternatives to limited resale inventory. The price gap between existing and new homes has significantly narrowed in recent months, making new homes more appealing to buyers.
Despite mortgage rates remaining above 6.75% in July, new home sales increased by 4.4%, reaching a seasonally adjusted annual rate of 714,000 compared to June’s 684,000. Mortgage applications for new home purchases also surged by 35.5% year-over-year, with a growing share of these applications backed by FHA-insured loans, popular among low- to moderate-income and first-time buyers due to their lower credit score and down payment requirements. The median sales price for new homes, which dipped to $417,200 in April 2023, rose to $436,700 in July, indicating sustained demand and a competitive edge over existing homes.
Single-family starts saw a 6.7% increase in the construction sector in August, but the industry faced challenges like rising mortgage rates and higher construction costs. Builder confidence, as measured by the NAHB/Wells Fargo Housing Market Index, fell from 56 to 50 in August, with higher mortgage rates and construction costs contributing to this decline. Builders began offering more incentives to attract buyers, particularly as tighter credit conditions and rising interest rates influenced the pace of home building. To address affordability concerns, builders reduced the size of new units, aiming to make new construction more accessible to buyers.
40% of Customers Find No Mortgage Support from Their Bank
A recent survey conducted by LendingTree with 1,000 Americans revealed that many consumers lack a clear understanding of the mortgage process, and many lenders do not provide sufficient support. Approximately 22% of respondents admitted to not understanding the mortgage process, while an alarming 41% reported that their primary financial institution offered them no assistance in mortgage lending. This indicates a significant gap in consumer knowledge and support from lenders during the mortgage application process.
The survey also highlighted varying consumer attitudes based on geographical regions. Consumers in the West displayed more confidence in understanding the mortgage process, with 82% indicating at least some comprehension. On the other hand, the Northeast, Midwest, and South had significantly higher percentages (24%, 23%, and 23%, respectively) of consumers lacking confidence in their understanding of mortgage procedures. Additionally, different regions exhibited various concerns influencing homebuying decisions, such as high prices, interest rates, and inflation, which impact consumers’ confidence in affording a new home.
Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.