Today, in the Calculated Risk Real Estate Newsletter: New Home Sales at 640,000 Annual Rate in February
Brief excerpt: And on prices, from the Census Bureau:The median sales price of new houses sold in February 2023 was $438,200. The average sales price was $498,700.The following graph shows the median and average new home prices. The average price in February 2023 was $498,700 down 4.5% year-over-year. The median price was $438,200 up 2.5% year-over-year. This suggests a year-over-year decrease in prices, although both the median and the average are impacted by the mix of homes sold.
This was for contracts signed in February when mortgage rates were lower – and builders were buying down rates. Mortgage rates increased again at the end of February, and that will likely impact sales in March.
As previously discussed, the Census Bureau overestimates sales, and underestimates inventory when cancellation rates are rising, see: New Home Sales and Cancellations: Net vs Gross Sales. This might be reversing now since cancellation rates have started to decline. When a previously cancelled home is resold, the home builder counts it as a sale, but the Census Bureau does not (since it was already counted).
There are a large number of homes under construction, and this suggests we will see a further increase in completed inventory over the next several months – and that will keep pressure on new home prices.You can subscribe at https://calculatedrisk.substack.com/.