Homeowners with mortgage rates too low to give up aren’t listing their homes, pushing buyers to the new-home market – an economic boon for builders.
NEW YORK – High interest rates are actually making new homes easy to sell by compounding a shortage of available real estate. Existing home sales have slowed because fewer owners are willing to sell, and that has pushed buyers into the arms of homebuilders.
The National Association of Realtors® reported on June 22 that there were just 1.08 million existing homes on the market in May. In May of 2019, there were 1.91 million.
Even at higher rates, however, people still want to buy a home, and many are cash buyers unconcerned with mortgage rates. They include older adults who have paid off their mortgages, and are now looking to downsize or move to more pleasant climates. Some have the desire and ability to buy a home despite higher rates, and with rates holding to a high level for a while, hopes of a sudden decline have faded.
The current shortage is part of the reason new home sales have been pushing higher, while sentiment among builders, which fell sharply through the fall, has begun to recover.
It might also partly account for the big jump in the number of homes under construction.
Source: Wall Street Journal (06/22/23) Lahart, Justin
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