Comments on: New Home Sales Down in November but Should Improve Moving Forward

By: Specialized Concrete Solutions

Specialized Concrete Solutions — Wed, 10 Jan 2024 14:11:55 +0000

The dip in new home sales during November might seem concerning at first glance, but there’s a silver lining to this data. Despite the temporary setback, the forecast for future improvement indicates a positive trajectory for the housing market. Various factors like supply chain disruptions and fluctuating market conditions might have contributed to this decline. However, with increased stability in supply chains and potential adjustments in market strategies, there’s an optimistic outlook for a rebound in the coming months. This downward trend could signal a momentary pause rather than a long-term slump, especially considering the persistent demand for housing and potential economic recovery. Keeping an eye on the evolving market dynamics and potential shifts in consumer behavior will be crucial, but the prospects for a bounce-back in new home sales appear promising as we move forward.

By: Jim B

Jim B — Wed, 27 Dec 2023 12:43:32 +0000

As a follow up to Dr. Duru’s question, it is likely that the “balanced inventory” for new homes will change each time there is a major interest rate drop. According to sources on Bloomberg News 90% of home owners with a mortgage have an interest rate below 6%, 80% have a mortgage below 5%, and 60% of mortgages are below 4%. About 2/3rds of homeowners have mortgages. Thus, the “balanced inventory” levels will likely be different if rates drop into the 5-6% range, versus if they dropped into the 4-5% range (which we may never see again). In other words, if only 10-20% of existing mortgage owners can benefit (or stay the same) from new 5% rates, then that will continue to lock a lot of home owners into their existing homes. Should be very good for new home demand.

By: Dr. Duru

Dr. Duru — Fri, 22 Dec 2023 17:53:01 +0000

Has anyone recalculated what a balanced inventory level means for new homes given the shortage in existing homes? Also, once lower mortgage rates free up more inventory for existing homes, I wonder what effect, if any, it will have on new home sales…