Spring Chill Spreads to US Real Estate Market as New Home Sales Drop
This year’s springtime chill hasn’t been solely confined to the weather. The market for newly-built houses also experienced a major cooldown, according to an April 23 Wall Street Journal article.
In the lowest sales month since last July, new home sales in March fell 14.5% from February, according to figures released by the Commerce Department. This represents a 13.3% drop from last March.
The Wall Street Journal attributes this plummet in purchases of new homes to this year’s harsh winter weather, a rise in new home prices and reduced availability in loans combined with a still-sluggish economy.
“We have not noticed a drop in our area,” explains Michelle Dohrwardt, Office Manager of Dodson Custom Homes LLC. “It’s a possibility that the weather could be a factor in other parts of the country.”
Typically, new home sales make up about 10% of all houses purchased in the U.S. In March, average prices of new homes rose to an all-time high of $290,000, a figure which shuts out many first-time buyers from even considering newly-built homes as an option.
In general, the numbers for new home sales have been volatile over the last year, with no clear trend upward or downward, according to the Wall Street Journal. Both hopeful buyers and builders of these houses face hindrances, the article says.
For potential buyers, a rise in mortgage rates and stricter lending policies make these highly-priced new homes an expensive option. Builders cite increased construction costs, a lack of reliable labor and a decrease in available residential land lots as difficulties.
Yet despite what appears to be a dire situation for the new housing market, there are some signs of hope for recovery. March marked the second month in a row in which builders started construction on more new homes, the article said. Housing starts rose 2.8% last month with a surge in new single-family home constructions.
With a greater number of available new homes on the market across the country, prices for newly-built homes should fall, making it easy for buyers to find affordable new custom homes once again.