Home Sales And Sketchy Headlines

When headlines imply things are better than they feel, it is always
good to take a closer look. January home sales headlines are a good
example. The Latest Headlines

In the most recent headlines for the home sales number in
January, you could be forgiven for thinking that things are
looking up. Sadly, that is not the case. At least, it is not
giving the right overall impression as they focus on month to
month numbers instead of year over year numbers. So today, we are
going to look at the real numbers, but also compare those
national and regional numbers to what we are seeing right here in
Santa Clara County.
New Home Sales

The U.S. new-home sales rose 7.2% to a seasonally adjusted rate
of 670,000 in January, up from a revised 625,000 in the prior
month, the Commerce Department reported on Friday. However, the
year-over-year new-home sales are still down by 19.4%, which
indicates a decline in the housing market. Regionally, the South
led the U.S. in the number of new homes sold, with the figure
surging by 17.1%, while sales of new homes dropped across the
rest of the country—most sharply in the Northeast, by 19.4%.


Despite the overall decline in home sales, home builders are
offering incentives like mortgage-rate buydowns to entice buyers,
and it's working. However, mortgage rates crept back up this
month, which is prompting more buyers and sellers to back off.
Home-purchase applications dropped to the lowest level since 1995
last week as mortgage rates jumped on expectations that the
Federal Reserve will need to raise interest rates again to combat
inflation. The average 30-year-fixed mortgage rate is now 6.5%,
up from an average of 6.27% in January and 3.89% a year ago. That
has caused the typical home buyer's monthly payment to rise more
than $500 year over year.
Some Existing Home Sales Numbers

Closed home sales fell 1.4% from a month earlier in January and
slumped a record 36.6% from a year earlier. Many homeowners are
reluctant to sell because they don't want to give up their
relatively low mortgage rates. About 85% of mortgage holders have
a rate far below today's level of roughly 6%. The median sale
price of homes nationwide was $383,249 in January, down 1.4% from
December and 11.5% below the May all-time high. Still, prices
were up 1.5% from a year earlier, in part because low supply kept
prices afloat.
Mortgage Rates And New Home Incentives

The housing market is facing challenges due to rising mortgage
rates and inflation. Many home buyers are now hesitant to make a
purchase due to the increased cost of borrowing. In addition,
many homeowners are holding onto their properties because they
have low mortgage rates, which is creating a shortage of homes
for sale. This supply-demand imbalance is leading to higher
prices for the homes that are available on the market.


Despite the challenges, home builders are continuing to offer
incentives to buyers to entice them into the market. These
incentives may include mortgage-rate buydowns, cash-back offers,
or other perks. The incentives are helping to keep the market
afloat, but they may not be enough to reverse the overall decline
in home sales.
Different Regions, Different Results

The decline in home sales is not uniform across the country. The
South, which is the largest region in the U.S., saw a surge in
new-home sales, while the Northeast saw the sharpest decline in
sales. The regional disparities in the housing market may be
attributed to a variety of factors, such as job growth,
affordability, and population growth.


The housing market is facing significant challenges due to rising
mortgage rates and inflation. Home buyers are now more cautious
about making purchases due to the higher cost of borrowing. In
addition, many homeowners are reluctant to sell because they have
low mortgage rates, which is creating a shortage of homes for
sale. While home builders are offering incentives to entice
buyers, the market is likely to remain weak until there is more
stability in the economy and interest rates.
SOURCES:


https://www.forbes.com/sites/brendarichardson/2023/02/25/high-housing-costs-low-supply-hamper-market-recovery-in-january/


https://www.realtor.com/news/real-estate-news/u-s-new-home-sales-rise-by-7-2-despite-weakness-in-the-broader-sector/


https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed



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