01/29/2024
Let’s give America’s home builders a round of applause
Housing starts. It's one of those terms that translates into “the straw that stirs the soup,” so to speak. And rarely over the past decade or so has the soup been stirred so strategically than it was in 2023, according to HousingWire, which reports that it pretty much helped save the country from recession.
“Sales of new single-family homes surprised in December, exceeding consensus expectations of 649,000,” the latest report tells us. “New home sales reached a seasonally adjusted annual rate of 664,000, according to data published on Thursday by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). This strong finish to 2023 is 8% above the revised November rate of 615,000 and 4.4% above the December 2022 estimate of 636,000.”
As mortgage interest rates went down, builder confidence improved. That means at the current building pace, there is an 8.2 months’ supply of new single-family homes, exceeding last year’s pace. “The current inventory remained elevated in December at a level of 453,000, up 0.4% compared to December 2022.”
The National Association of Homebuilders (NAHB)’s vice president Danushka Nanayakkara-Skillington says, “New home sales ended the year on a high note thanks largely to falling interest rates and a decline in existing home sales. And while moderating interest rates are a promising sign for new home sales in the year ahead, long-term issues such as a shortage of buildable lots, a lack of skilled labor and excessive regulations will continue to pose challenges for builders.”
Prices? It’s all relative. While the median sale price for a new home decreased 3% compared to November compared with one year ago, prices for new homes remain significantly higher compared with pre-pandemic new-home prices.
Experts say the decline in prices can be partially attributed to two factors: the builders’ strategy to offer price incentives to entice buyers, and a shift in the ‘mix’ of new homes being sold. “The median sale price of a new home in December 2023 was $413,000, and 47% of homes sold were priced below $400,000,” says HousingWire. “In comparison, the median price for a new home in October 2022 was approximately $497,000, and only 33% of new homes sold were priced below $400,000.”
They also report that overall, homebuilders charged less for houses in 2023 than in 2022 and sold more houses. NAHB chair Alicia Huey says there is an expectation that sales will rise in 2024. All good news for the economy, the trades, homebuilders, product and appliance manufacturers, lenders, and even real estate agents who know those now-new homes eventually change hands.
HousingWire, TBWS
