Most of the trends within the real estate market for the last few years have been very solid and even extreme. This last week the National Association of Home Builders [NAHB] came out with their Builder’s Sentiment Housing Index. It indicated that for the 7th straight month there were gains in most areas for the month of June.
Because of the shortage of available existing homes for sale, builders believe that this low supply represents a huge opportunity and demand for new construction. Of course those are constraints upon new construction, that being inflation, high mortgage rates, shortage of building sites, and the issues of supply chain disruptions, which are still in place.
There’s always a bit of caution from the builders ever since the big crash in 2006-08, but they still are very optimistic for the short-term, at least.
As long as the average 30-year rate for a mortgage stands above 7%, there will be constraints upon new construction.
The NAHB rose 1 point to 62; and the buyer-traffic index also rose, hitting 40, which is the highest level since June 2022. The only area in the index to fall was the sales expectation for the next 6 months, which fell two points to 60. The reason for the weaker expectation is due to the anticipated rise in interest rates impacting the affordability.
An interesting component of this particular report was that there are a fewer builders using incentives to entice purchases. Only 22% of builders reported cutting prices in July 2023, which is down from 25% reported in June and 27% in May.
According to the recent NAHB report, the sales of newly built homes in May climbed 13%, as compared with April 2023. The numbers for May were 20% higher than those reported for May of 2022. Still there is pricing pressure being reported on some of those newly built homes that were sold where the median price was down 7% from May of 2022.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single-family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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