If you’ve had your eye on the state of the real estate market, you’ve likely seen some significant highs in home prices as well as huge spikes in consumer demand during the pandemic. As Andrew Shader and other real estate pros agree, the pandemic brought about one of the most unprecedented seller’s markets in several years.
As pandemic shutdowns started to end and the effects of COVID-19 started to cool down, so did the real estate market. Housing supply has been steadily increasing, and buyers now have much more negotiating power than they did last year.
However, current numbers may suggest that as home sales are starting to rise again despite abnormally high mortgage rates, home prices themselves are also on an upward trend. So just what is going on here?
Here’s What the Census Is Saying
According to the U.S. Census Bureau and the Department of Housing and Urban Development, the sale of new single-family homes was at an annual seasonally adjusted rate of about 632,000 in October 2022 throughout the country.
This figure lies 7.5% higher than the rate in September of 2022, which was about 588,000, and it’s around 5.8% lower than October 2021’s estimate of around 671,000.
One detail that is unaccounted for in the U.S. Census Bureau’s count is the number of sales cancellations, which is also on the rise.
Here’s What It Means
So does this increase in new home sales during October foretell a coming trend, or is it simply a fluke? Since that census count in October, home sales have not continued to increase at such a significant rate.
However, only a few months have passed since this count, which means the exact future of the new home purchase market is difficult to see. It’s important to note that census counts like these can swing up or down pretty significantly from month to month, and a more accurate trend can be gleaned from looking at the entire year as a whole.
The most likely cause of this temporary uptick in home sales and prices is some post-pandemic real estate activity. Many people were waiting for the COVID-19 housing bubble to pop before making a move, especially if they were looking to buy.
Therefore, it only makes sense that new homeowners will be making a move now that home supply is higher than last year and buyers have greater negotiation power.
How Mortgage Rates Will Affect New Home Purchases
As you’re likely well aware, mortgage rates are at a significantly high rate at the moment, thanks to inflation and other post-pandemic factors. High mortgage rates always deflate home purchase rates, but homebuyers are unlikely to wait forever.
Especially now that inflation seems to be faltering, new home purchases are likely to continue rising, even if not at a particularly high rate.
Insights from Andrew Shader
As a real estate pro, Andrew Shader’s specialty is using corrective action to help his investment properties reach their full market potential. He uses his extensive real estate experience as well as his entrepreneurial background to provide high value to his clients.
