Real Estate Agent Magazine Economy and Housing Market Divergence in Supplies between New and Existing Homes

Divergence in Supplies between New and Existing Homes

Homebuilders offer buyers options unavailable through existing-home sales markets.

Newly built homes account for only 10% of home sales market, but builders have increased this percentage considerably this year and expect further gains by 2024. Even with higher mortgage rates, new-home sales are on the rise due to builders releasing more inventory into the market than they were prior to COVID-19 pandemic. Conversely, existing homes market is stagnating due to reduced availability; inventory levels have decreased by about half what they were in 2019. After two consecutive years of nearly 20% declines, existing home sales will experience a rebound next year with an expected baseline gain of 10% to 15%. Should more inventory materialize suddenly, unexpected gains of 25% to 30% could become possible; such scenarios show how important inventory can be in driving sales forward.

Builders can increase inventory through new home construction, while existing-home owners must let go of low mortgage rates secured two or three years ago, such as 2.5%-3% rates secured during that time. That may seem too tempting for some owners; but considering all that has taken place over recent two years – 3 million marriages, 1.5 million divorces, 7 million births, 4 million deaths and 7 million Americans reaching 65 – staying put may no longer be an option for growing families or divorcing couples; people need and want to move – even small drops in mortgage rates could entice people enough.

Since 2014, 4 million net new jobs and 50 million job switches have been created, providing office workers with opportunities that accommodate hybrid work policies.

Pent-up supplies have steadily been rising. When combined with lower interest rates, they should create an even more dynamic housing sales market.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Post

Cease Rate HikesCease Rate Hikes

The Fed should heed Wayne Gretzky’s wisdom today. On the day Silicon Valley Bank went bankrupt, mortgage rates decreased significantly as investors fled into U.S. government bonds for safety. Of