Here’s why new home sales inch higher despite 7% mortgage rates
While the spring housing market has been plagued with low supply, high prices and spiking interest rates, would-be homebuyers are focusing on new construction.
The reason? New homes have more incentives and availability than previously owned ones.
“There’s more opportunity in new construction,” said Nicole Bachaud, a senior economist at Zillow Group.
About 693,000 new single-family houses were sold in March, up 8.3% from a year ago, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The median sales price was $430,700, the agencies found.
Meanwhile, sales for previously owned homes dropped by 3.7% from March 2023, the National Association of Realtors found.
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Many areas in the U.S. face a low inventory of existing homes as the mortgage rate lock-in effect, or the golden handcuff, keeps “existing owners from becoming sellers,” Bachaud explained.
With 30-year fixed-rate mortgage rates sitting above 7%, homeowners who bought at much lower rates in recent years don’t like the prospect of trading in their low rate for a higher one.
-VIA CNBC
