The U.S. Department of Housing and Urban Development and the Commerce Department reported This Week in Real Estate that the new home market experienced an impressive surge, with newly built, single-family home sales skyrocketing 12.3 percent compared to the previous month and a remarkable 33.9 percent increase from the same period last year. This robust growth is a testament to continued demand outpacing the supply challenges in the resale market. The positive trend is further reinforced by a 1.1 percent rise in the September Pending Home Sales Index over the prior month. Affordability is a headwind as home prices remain elevated while mortgage rates in the U.S. rose for the seventh consecutive week according to Freddie Mac, however, the favorable new home sales and PHSI growth indicates sustained interest and activity in the real estate sector. Below are a few newsworthy events from the fourth week of October that influence our business: PENDING HOME SALES GREW 1.1% IN SEPTEMBER. The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – rose 1.1% to 72.6 in September. Year over year, pending transactions declined 11%. NAR predicts existing-home sales will decrease 17.5% in 2023, settling at 4.15 million, before rising 13.5%, to 4.71 million in 2024. Compared to last year, national median existing-home prices are projected to remain stable in 2023 – edging higher by 0.1% to $386,700, before increasing by 0.7% next year, to $389,500. Housing starts will drop 10.4% from 2022 to 2023, to 1.39 million, before rising to 1.48 million, or 6.5%, in 2024. “Because of homebuilders’ ability to create more inventory, new-home sales could be higher this year despite increasing mortgage rates. This underscores the importance of increased inventory in helping to get the overall housing market moving,” said Lawrence Yun, NAR chief economist. NAR expects newly constructed home sales will grow from last year by 4.5% in 2023, to 670,000 – because of additional inventory in this market segment – and increase by another 19.4% in 2024, to 800,000. The national median new home price will drop by 5.9% this year, to $430,800, and improve by 3.5% next year, to $445,800. NAR forecasts that the 30-year fixed mortgage rate will average 6.9% for 2023 and decrease to an average of 6.3% in 2024, while the unemployment rate will lower to 3.7% in 2023 before increasing to 4.1% in 2024. Read the full story here. NEW HOME SALES IN U.S. SPIKE 34 PERCENT ANNUALLY IN SEPTEMBER. Sales of newly built, single-family homes in September increased 12.3% to a 759,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in September was up 33.9% from a year ago. “New home sales surged in September largely due to the low existing home inventory rate, as many homeowners with attractive mortgage rates are electing to stay put rather than purchase a move-up home with a much higher interest rate,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. New single-family home inventory in September was 435,000, down 5.4% compared to a year ago. Completed, ready to occupy inventory is up 39.6% from a year ago, however that inventory type remains just 17% of total new home inventory. Read the full story here. U.S. ECONOMIC GROWTH ACCELERATES IN THE THIRD QUARTER. The U.S. economy had remarkable growth in the third quarter of 2023, fueled by consumer spending. The GDP price index rose 3.5% for the third quarter, up from a 1.7% increase in the second quarter. The Personal Consumption Expenditures (PCE) Price Index, capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior, rose 2.9% in the third quarter, up from a 2.5% increase in the second quarter. According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) increased at an annual rate of 4.9% in the third quarter of 2023, following a 2.1% gain in the second quarter. It is the biggest jump since the fourth quarter of 2021 and the fifth consecutive quarterly increase in GDP. Residential fixed investment (RFI) rose 3.9% in the third quarter. This was the first gain after nine consecutive quarters for which RFI subtracted from the headline growth rate for overall GDP. Within residential fixed investment, single-family structures rose 21.6% at an annual rate, multifamily structures rose 4.5% and improvements decreased 1.7%. Read the full story here.
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