Recent article in Fortune magazine talked about how builders will be in the driver’s seat because of the shortage of inventory over the next few years. The number of new homes being built has not slowed down, according to the recent KB Home article published in their SEC filing, indicating that in 2023 it sold 3,936 new homes with the period ending May 31st. This compares with the 3,914 homes it sold for the three-month period ending May 31st, 2022.
The rise in the mortgage rate had no impact on sales. It appears that home buyers are having to bite the bullet and pay more for what they want. In a prior blog from Counsellors Title, it reported that prices of new construction are actually unchanged for smaller homes.
Some builders have raised prices by as much as 70-75%.
Availability of existing homes for sale is now in the 2-month supply range, as compared to the traditional 6-month supply level.
According to the US Census Bureau, new home sales have increased by 31% year-over-year. This is an anomaly when compared to the existing home sales reported in July 2023, which were down over 23% from July 2022.
The supply issue is being further challenged by supply chain issues that were triggered by the pandemic and other governmental regulatory constrictions. The Gen. Z home buyers are still looking for homes but their experience is totally different than their preceding generations.
The statistics published by the National Association of Realtors indicate that in August 2023, there were 46% fewer home listings than in 2019. But this gap was even greater in New Jersey, which recorded a 75% gap.
Still, there is no anticipated home price decline expected. Housing affordability is clearly going to track with inventory availability. Mortgage rates are going to be a new built-in cost parameter that the market is seeming to adjust to.
Inventory in New Jersey fell precipitously in July from 20,658 in 2022 to 13,230 in 2023.
And in 2018 the inventory in the State of New Jersey stood at over 40,000 homes on the market.
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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