Housing Market Update
Data from the Department of Housing and Urban Development revealed that new home sales have been falling. Sales for new homes have been affected as mortgage rates have risen and a lack of supply is still an issue. Labor shortages of qualified workers throughout the housing industry have placed a strain on the construction of new homes, an issue that is not prevalent with existing home sales.
Affordability is becoming an issue as rates have risen, driving up mortgage payments. Even though prices have fallen with the median priced home at $302,100 this past month down from $322,900 a year ago, the current 30-year fixed conforming rate has risen to 4.54% from 3.92% in the same period. Lower home prices are offsetting some higher mortgage rates in certain parts of the country.
Home prices are becoming out of reach for many first-time buyers, especially younger singles and couples that are an essential catalyst for an expanding housing market. According to Freddie Mac, higher home prices, specifically on lower priced homes, have reduced affordability for younger home buyers.
New home sales, not existing home sales, is the housing sales component measured into GDP. Existing home sales have also dropped in the past year, by over 2%. Government data includes new home sales because of the new expenses created, such as property tax, first time mortgage, and utilities.
Source: U.S. Census Bureau, U.S. Department of Housing and Urban Development, Freddie Mac, https://www.census.gov/construction/nrs/pdf/newressales.pdf