Rising Demand Fuels New Home Sales Amid Low Inventory

Hello there! Kevin Farfan, your go-to realtor in Tampa, back again with some intriguing updates from the real estate sector. You may have noticed some shifts in the housing market recently, and one trend worth mentioning is the impressive increase in new home sales.

April marked the seventh consecutive month of growth in new home sales, largely driven by low inventory prompting a surge of demand into the new construction market. Based on recent data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, new home sales rose by 4.1% to a rate of 683,000, significantly above March’s revised rate of 656,000.

Compared to last year’s revised rate of 611,000, we’re seeing an 11.8% increase. This trend indicates a substantial shift in demand towards new construction, a direct result of the ongoing inventory challenges.

As Alicia Huey, Chairman of the National Association of Home Builders (NAHB), pointed out, “A lack of existing inventory supported sales of newly built, single-family homes in April.” Encouragingly, the more affordable price ranges of $200,000 to $400,000 have experienced substantial sales growth.

Breaking it down regionally, sales climbed 11.8% to 76,000 in the Midwest and 17.8% to 443,000 in the South. In contrast, the Northeast experienced a steep 58.6% drop to 24,000, and the West saw a 9.1% decline to 140,000 in sales. On a year-to-date basis, new home sales fell in all regions.

The median new home sales price was $420,800, with an average sales price of $501,000. Both figures mark a decrease from March’s median of $449,800 and average of $562,400. Interestingly, growth was seen in the lower price ranges. The number of sales in the $200,000 – $299,999 range doubled compared to last year, and the $300,000 – $399,999 bracket also demonstrated considerable growth.

NAHB Chief Economist Robert Dietz commented, “April saw an increase in new home sales as buyers sought new construction even as builders struggle to keep up with demand because of a shortage of distribution transformers and skilled construction workers.”

However, 2023 sales are still down by 9.7% on a year-to-date basis due to elevated interest rates, and we may see a further weakening of sales in the months ahead considering the recent rise in interest rates.

As of the end of April, there were 433,000 new houses available for sale, amounting to a 7.6 month supply. It’s worth noting that a six-month supply is generally considered balanced.

Dr. Lisa Sturtevant, Chief Economist at Bright MLS, highlighted that “This spring, new home sales are a more important part of the market than they would be in a more typical year… the share increased to about 14%.”

In conclusion, the surge in demand for new homes signifies a significant shift in buyer behavior and market dynamics. As your trusted realtor, my aim is to provide you with insights and guidance as we navigate these evolving trends together.

Stay tuned for more updates!

Kevin Farfan, your Tampa real estate expert, signing off.