New Home Sales Rise in March Despite Higher Interest Rates

Despite higher interest rates last month, new home sales saw an unexpected rise in March due to limited inventory of existing homes. However, the pace of new home sales is expected to face pressure in April as mortgage rates have moved above 7% this month. This increase is anticipated to moderate sales and push builders to use more sales incentives this spring.

March Sales Performance

According to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in March rose 8.8% to a seasonally adjusted annual rate of 693,000 units from a downwardly revised reading in February. This pace is up 8.3% compared to the same period last year.

"Although consumer demand has been somewhat dampened due to higher interest rates, builders continue to supply new homes to the market to lift inventory to make up for the low resale supply," said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kansas. "Rates moving above 7% however, will move some home buyers to the sidelines as the spring progresses."

The Impact of Higher Mortgage Rates

NAHB Chief Economist Robert Dietz emphasized the significance of increasing housing supply to address shelter inflation and lower interest rates. "Shelter inflation remains the largest, lingering obstacle to lower inflation. More housing supply will ultimately tame shelter inflation growth and lower interest rates. This will improve the cost of financing for land developers and home builders and enable more attainable housing supply."

Understanding New Home Sales

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction, or completed. The March reading of 693,000 units represents the number of homes that would sell if this pace continued for the next 12 months, adjusted for seasonal effects.

Inventory and Prices

In March, new single-family home inventory remained elevated at 477,000 units, up 2.6% from February. This represents an 8.3 months' supply at the current building pace, supported by the ongoing shortage of resale homes. In contrast, data from the National Association of Realtors indicate just a 3.1 months' supply of existing single-family homes in March, with a balanced market typically having a 5 to 6 months' supply. The inventory of newly built single-family homes is up 10.2% year-over-year.

The median new home sale price in March was $430,700, up nearly 6% from February, though down 1.9% compared to a year ago.

Regional Performance

Regionally, new home sales on a year-to-date basis show varied performance across the country:
- Northeast: Up 15.1%
- Midwest: Up 17.8%
- West: Up 28.1%
- South: Down 6.6%

While new home sales experienced a boost in March, the rise in mortgage rates to above 7% in April is likely to temper this growth. Builders are expected to increasingly offer sales incentives to attract buyers amidst affordability challenges. The continued efforts to increase housing supply will be crucial in addressing shelter inflation and stabilizing the market for both homebuyers and builders.

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Revitalizing Old Mandeville: North Star Theatre Reopens After a Decade

The cozy North Star Theatre in Old Mandeville has been dark for more than a decade, long enough for its owner to be hazy on the name of the last production it hosted. But that is about to change in just five weeks when the house lights dim once again for a troupe of actors starring in a local production of "Chicago."

A New Era for the North Star Theatre

Starting on May 30, the theater's reopening is set to breathe new life into the North Star Theatre. This event will also highlight the older building connected to it, which has been meticulously renovated over the past four years.

A hotel dating back to the 1920s, this building at the corner of Girod and Madison streets in Old Mandeville has undergone an extensive renovation led by Jill McGuire, who is also a councilwoman in Mandeville. The project, which cost over $2 million, has transformed the 96-year-old Allenton Hotel building into the North Star Cultural Arts Center.

Seeking Artistic Tenants

Jill McGuire hopes to attract galleries or other art-centered tenants to complement the theater, which is attached by a walkway through a wide hall suitable for exhibitions. McGuire envisions events where audiences can enjoy a reception in the open space on the first floor before moving into the theater for a show.

"Think about an event here, a reception, where the audience would then flow into the theater for the show," said McGuire, as she showed off the 3,400 square feet of open space on the first floor of the two-story building. "At least that's the dream, right?"

Historical Transformation

The main building dates to 1927, originally opening on New Year's Eve as the Allenton Hotel. Built by E.J. Allen, the hotel was intended to serve passengers on a rail line that was planned to run along Girod Street. Although the rail line never materialized, the hotel managed to survive through the late 1950s, primarily accommodating workers constructing the Causeway Bridge.

Over the decades, the hotel closed, and in the late 1970s, the first floor housed several small businesses and was dubbed the "Small Mall." The building's wooden exterior was eventually covered in drab vinyl siding.

Restoration Challenges and Triumphs

Jill McGuire and her former husband, Barrett McGuire, purchased the complex in 2020 and embarked on the renovation, with Barrett conducting much of the research to match the original materials used in the hotel's construction.

"This place has had a lot of lives. Now it has another one," Jill McGuire said. She added that the building is rumored to have been a brothel at one time and that it is still haunted, though she hasn't seen any ghosts herself.

The renovation faced significant challenges, including delays caused by the pandemic and Hurricane Ida, which damaged the foundation and increased the cost of building supplies. Much of the original pine siding had to be replaced with custom-made boards from Gulfport, Mississippi, colored rust-red to match old photographs.

"It seems like everything just takes longer," McGuire said. "But the bones were really good."

Community Excitement and Future Plans

Local resident Nancy Clark, who has compiled histories of numerous old buildings in the area, praised the renovation. "The exterior is absolutely beautiful," Clark said. "I have high hopes for it."

While McGuire dreams of the building being filled with artsy types, most interest so far has come from prospective renters seeking small office space. "We'll just have to see what happens," she said.

Showtime at the North Star Theatre

One certainty is the reopening of the theater. Built in the late 1980s, the auditorium seats around 100 and previously hosted a regular season of shows. This tradition is set to return with the production company Evangeline Theater Co. handling the shows. "Chicago" will run for eight performances, and McGuire said more productions will follow.

"We're going to have a regular season," she said. "I hear a lot about it. I think people are really excited."

The revitalization of the North Star Theatre and the Allenton Hotel building marks a significant milestone for Old Mandeville, promising to bring cultural enrichment and community engagement back to the heart of the town.

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Considering Buying a Home This Spring? Explore the Benefits of New Home Construction

If you're planning to buy a home this spring, you're likely facing the dual challenges of affordability and limited inventory. However, there might be a solution that addresses both issues: newly built homes. Here's why you should consider this option.

New Home Construction: An Inventory Bright Spot

When searching for a home, you have two main choices: existing homes (those already built and previously owned) and newly constructed ones. Despite a slight increase in the number of existing homes for sale this year, the inventory is still lower than in more typical years like 2018 or 2019. If you're looking to expand your options, newly built homes can provide a viable alternative. Danielle Hale, Chief Economist at Realtor.com, notes:

"The shortage of existing homes for sale has opened up the possibility of new-home construction to more buyers who may not have once considered it."

The good news is that there are currently more newly built homes available. Recent data from the Census Bureau shows a significant increase in both housing starts (homes where construction has just begun) and completions (homes that builders have just finished). This means you have a broader range of options, whether you want a move-in ready home or prefer to customize a build from the ground up.

Builders Are Offering Incentives to Help with Affordability

To make new homes more attractive, builders are offering various incentives, such as mortgage rate buy-downs and other perks for homebuyers. These incentives can help mitigate today's affordability challenges and get you into your dream home. Mark Fleming, Chief Economist at First American, explains:

"Builders aren't rate locked-in. They would love to sell you the home because they're not living in it. It costs money not to sell the home. And many of the public home builders have said in their earnings calls that they are not going to be pulling back on incentives, especially the mortgage rate buy-down, so that will help the new-home market continue to perform well in the spring home-buying season."

An article from HousingWire also highlights the trend:

". . . the use of sales incentives still shows some momentum as 60% of respondents reported using them, up from 58% in February."

Partner with a Real Estate Agent

Buying from a builder is different from buying from a homeowner, and it's crucial to partner with a local real estate agent who can guide you through the process. Builder contracts can be complex, and a trusted agent will advocate for you at every step. They'll provide valuable insights on construction quality and builder reputation, help you review and negotiate contracts, advise on worthwhile customizations and upgrades, and much more.

If you're struggling to find a home due to today's affordability challenges and limited inventory, consider newly built homes. They might be the solution you need. Connect with a local real estate agent to explore this option and see how it can benefit your home-buying journey.

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Downsizing in Retirement: A Smart Move to Save Money

As you enter retirement, reassessing your expenses and finding ways to save money becomes increasingly appealing. One long-standing and popular strategy for doing so is downsizin

When you think about cutting down on your spending, you might first consider everyday expenses like groceries and other goods. However, downsizing your house can lead to significant savings on bigger-ticket items such as mortgage payments, energy costs, and maintenance. According to Realtor.com:

"A smaller home typically means lower bills and less upkeep. Then there's the potential windfall that comes from selling your larger home and buying something smaller."

This financial windfall is primarily due to your home equity. If you've lived in your home for several years, you've likely built up a substantial amount of equity. This equity can be a significant asset in retirement, as Daniel Hunt, CFA at Morgan Stanley, explains:

"Home equity can be a significant source of wealth for retirees, often representing a large portion of their net worth. . . . Retirement planning can be complex, but your home equity shouldn't be overlooked."

When you're ready to tap into your home equity to fund your next move, a real estate agent can guide you through the process. They will help you set the right price for your current home, find a new home that better fits your evolving needs, and understand what you can afford with today's mortgage rates.

If you're contemplating downsizing, here are a few questions to help you determine if it's the right move:

1. Have Your Needs Changed?
- Do the original reasons you bought your current house still apply, or have your needs changed since then?

2. Do You Need the Space?
- Do you really need and want the space you have right now, or could a smaller home be a better fit?

3. What Are Your Current Housing Expenses?
- Assess your current housing expenses and determine how much you want to save by downsizing.

Once you've answered these questions, meet with a real estate agent to explore your options. A local agent can provide insights into how much equity you have in your home and how it positions you for a successful downsizing move.

If you're looking to save money in retirement, consider downsizing. It can significantly reduce your expenses and provide you with the financial flexibility you need to enjoy your retirement years. When you're ready to take this step, connect with a local real estate agent to discuss your goals and explore the housing market. Downsizing could be the key to a more comfortable and financially secure retirement.

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