Home Pricing Increases Continue Amid Low Inventory

 

Despite the increase in mortgage interest rates, home prices have remained stubbornly high for those real estate buyers who can still afford to purchase a new home for sale. The reason for this is that the market hasn’t recovered from the exceptional interest rates before and during the pandemic. Housing inventory remains low, which prompts bidding wars for available homes for sale. These bidding wars almost artificially inflate home prices, and the result has been a 1.4% increase in home value from April to May, which is the highest it’s been since June of 2022.

Even though this spring’s home buying season has been muted compared to the last two years, home buyers are still in the market to buy new and previously-owned homes in the Greater New Orleans

area. Nationally, the average home value was at $346,856, almost 1% higher than a year ago and 3.4% more than the beginning of 2023.

During a normal real estate market, pricing tends to trend downward beginning in August, but experts are waiting to see what this year’s market brings. The Midwest had the highest monthly price increases, and New Orleans, considered one of the smallest markets, increased by .6%. The trend of abnormally low home inventory continues in 2023 with May showing a 23% drop in listings compared to May, 2022, and this percentage aligns with the same drop of inventory in March of this year of 22%.

In addition to the pandemic surge and buyout of existing land and houses, another factor in the abnormally low inventory has been the high mortgage interest rates. Homeowners don’t want to sell their home, which probably had a fantastic interest rate and buy a home at a significantly higher rate. Also, once they put their home on the market, and it sells, they may not be able to find a new home to move into. Overall, in a 4-year comparison of home inventory, May 2023, inventory is 3.1% less than May of 2022, and 45.7% less than May of 2019.

If you are looking to buy a new home or build a new home, Ron Lee Homes has available lots for sale and ready to build your new home. Consider getting started with your home building process and Contact Us Today!

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Single-Family Home Sales Increase in 2nd Quarter

Single-family home sales increased by almost 24% compared to new home sales in 2015 in April.  Compared to March, 2016’s home sales, single-family home sales increased by almost 17%.  Finally, sales went up to 619,000, an eight-year high during the month of April as well.
Home buyers are taking advantage of the availability of new homes because the inventory of new homes for sale on the market has decreased to a 4.7 month’s supply – a total of 243,000 new homes for sale with only 56,000 completed, move-in ready homes available. Demand will require that builders increase their production of new homes for sale in order to keep up with the buyers.

Single-Family Home Builders

April’s sales numbers go hand-in-hand with the reported new, single-family home starts which increased by 3.3% at the beginning of April.  Builder confidence held steady for the 4th month in a row since February, 2016, which contributed to new construction starts and inventory on the ground.  Single-family home permits in the beginning of April were already up year-over-year by 8.4%, so construction of new homes should continue to escalate over the next few months.

While first-time home buyers are finding it difficult to find new homes for sale in their price range, the sales of homes priced from $150,000 – $200,000 increased to 10,000 sales in April.  For existing home sales, the first-time home buyer sales accounted for 32% of these sales, opening up the market, once again for homes priced affordably.

Good News for Resale Market

Existing home sale closings increased by 6% year-over-year and by 1.7% compared to March’s sales.  It is definitely a seller’s market right now as existing home inventory also stands at a 4.7 month supply like single-family new homes.

The 2nd quarter of 2016 shows good news for the housing market after a slow 1st quarter start.  New, single-family home starts and permits indicate an increase in new home inventory moving forward in the 3rd quarter.  Sellers should be able to “take their pick” of home buyers as supply currently is lagging behind demand.

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Real Estate Market Celebrates Statistics Which Indicate a Buyer’s Market

Real Estate Showing Buyer’s Market

In general, the real estate market seems to be turning more into a buyer’s market than a seller’s market – an indicator that the housing market continues its steady, slow rebound since the Recession.  New home buyers have cause for optimism with the increase in standing new home inventory which was upwardly revised for the month of March from 205,000 in March, 2015, to 246,000 new homes this year.  Currently, new home inventory stands at a 5.8 month’s supply.

Competitive Home Pricing

 

With the increase of available homes, new home pricing and existing home pricing are now competitively arranged in the housing market, making builders’ new homes for sale just as attractive price-wise as existing home pricing.  This trend of available new homes for sale is expected to continue as in the month of Market, there are approximately 149,000 new homes under constructions and 41,000 single-family homes that will be constructed according to the record of building permits throughout the country.  The building industry reported 56,000 move-in ready homes on the market ready to be closed.

New home pricing has also stabilized compared to new homes for sale in March, 2015.  The current new home median sales price is $288,000 where it was around $293,400 in 2015.  Overall, new home pricing gained in a year-over-year comparison, with homes in the $200,000 – $300,000 price range rising by 20% in comparison.

As new home inventory exponentially increases, and a high number of new homes “flood” the real estate market, new home sales are expected to increase in the months ahead as home buyers can expect to see a large variety of different floorplans, features, and upgrades available to them in making a choice of buying their new home for sale. Some buyers may choose to build their new home from scratch with a custom home builder such as Ron Lee Homes in St. Tammany Parish.  If you are interested in building your new, custom home, Contact Us at 985-626-7619 or E-mail Info@RonLeeHomes.com.

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Pace of New Home Sales and New Home Inventory on the Rise

Both the pace of new home sales and new home inventory are up according to the numbers reported for February, 2016.  New home sales went up by 2% bringing the seasonally adjusted amount to 502,000.  Standing new home inventory also moved upward slightly to a 5.6-month’s supply of homes meaning it would take this amount of time to sell off all of the standing supply of new homes for sale nationwide.  New home inventory has struggled to rebound because of three factors: lots,

construction workers and sub-contractors, and lending standards.

Lots available for building have actually been a problem for builders in pockets around the country as builders are ready to “get back to work” and build new homes for sale.  The lack of supply of ready lots have them searching more rural locations or building completely different floorplans to accommodate certain lot plats.

Construction employment demand has skyrocketed as opportunities begin to be more and more prevalent because of the surge in new construction.  Employees and sub-contractors seem to be now flooded with work, which leaves builders waiting on certain subs’ industries to come out to work on their new homes under construction.

Lenders have found ways to ease the home buyer’s woes by offering better standards of down payments with new FHA loan packages and rural development loans.  However, the kink in the industry came in late October and the beginning of November, 2015, when the new Closing Disclosure was implemented for real estate closings.  Banks, lenders, mortgage companies, and even title companies are on a fast learning curve to master the new system and get home buyers into their new homes fast.

In reality, it is better that the real estate industry is undergoing these types of struggles rather than a complete lack of demand and over 1.5 year’s inventory on the ground like it felt during the Recession.  The lack of all of the items mentioned above are actually a good problem for new home builders to have.  If you are interested in building a new, custom home in St. Tammany Parish, Contact Ron Lee Homes today to set up a meeting regarding new home plans and construction.  Call 985-626-7619 or E-mail Info@RonLeeHomes.com to set up your appointment.


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Home Sale Numbers Nationwide Dip Slightly

New protections by the Department of Housing and Urban Development (HUD) kicked in the first of October, but their effects were not felt until November when delayed closings affected home sales numbers nationwide.  The plunge in new home sales was expected because of the delays that the new system incurred coming out the gate.
The new system for closing new home loans and home loans included a drastic overhaul of the traditional HUD (Settlement Statement), and this new document, called the CD (Closing Disclosure) had multiple checks and balances throughout the Good Faith Estimate all the way to closing to ensure that home buyers know what every aspect of their home buying process is about.
Despite the expected slowdown in home sales in November, the National Association of Realtors said that solid gains in real estate have been seen throughout the entire year of 2015.

Another factor contributing to an adjustment in home sales numbers is the fact that home values are increasing a rate that is double that of typical wages.  Year-over-year, home values have increased 6.3% in November to $220,300.  The good news is that wages exist with an improving job market and still historically low interest rates are encouraging buyers and refinancers to get their loans done before there is a significant increase in the interest rate.

Still, builders will have to get busy in 2016 because the real estate market is still showing a gap between availability and inventory for new home buyers.  New home builders can fill this gap with newly constructed homes which will help balance out home prices.
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Invest in the Real Estate Market

For potential new home buyers, 2016 is the year to invest in the real estate market.  The housing market is still on the rise and there are still great deals to be found on new homes and resale homes. What is making real estate a hot ticket item for 2016?  There are many influences that are contributing factors to this year’s housing market.
Since the economic downturn’s departure, housing prices have been on the rise.  Zillow predicts home prices are going to rise a little slower in 2016.  According to Zillow’s Chief Economist Svenja Gudell prices are anticipated to rise 3.5%. This will give buyers who might not have had a chance in the competitive 2015 market an opportunity to purchase a home.

Jonathan Smoke, with Realtor.com believes this could lead to a succession of home buyers.  He states, “We have the potential for about six million home sales just through the months of April through September; that is basically impossible to do.”

Inventory will increase giving home buyers more options. “Because of the price appreciation they have experienced, you will have more sellers put homes on the market next year,” Smoke said.  Also the new home market will see growth in 2016 because builders are concentrating on the construction of starter and middle-range homes.  This boost in both existing home and new home inventory will make it easier for potential home buyers.  More homes on the market will also contribute to a slower price increase and less bidding wars.

This year we might be kissing cheap mortgages goodbye.  The Federal Reserve is slated to increase interest rates making this one of the last opportunities to benefit from record low mortgage rates.  Home buyers will have to cut back on their new home budget because the borrowing cost and monthly mortgage payments will be higher.

“You are likely to get the best rate you will possibly see, perhaps in your lifetimes through the majority of next year, but certainly, the earlier the better,” said Smoke.

The last influence to affect the 2016 housing market is rent vs. buy.  Renters beware; rent prices will still increase this year making it cheaper to buy a home.  The increase in mortgage rates will still outweigh rental pricing.  According to Ralph McLaughlin with Trulia, “Interest rates would need to rise to around 6.5% for the cost of buying to equal that of renting on a national level.” For those who want to purchase a new starter home, upgrade to a new home or larger home, and for those who want to downsize to a smaller new home, now is the time.

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