Nobody’s buying newly built homes anymore.
Just a few months ago, builders were sitting on lengthy lists of homebuyers waiting to purchase new construction and holding lotteries to announce who would be allowed to go under contract. Not anymore.
Sales of newly built homes plunged in July, according to a recent report by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The seasonally adjusted number of new homes for sale and sold dropped 12.6% compared with June, and plummeted 29.6% compared with July of last year.
The “drop in new-home sales represents a significant pullback in buyer demand, especially since slowdowns of this magnitude have historically preceded major economic recessions,” says Realtor.com® Senior Economist George Ratiu. “With the median price of a new home still near this year’s historic high and mortgage rates pushing the cost of borrowing much higher, buyers are finding they hit a financial affordability ceiling.”
As mortgage rates soared and home prices stubbornly marched ever higher, those eager hordes of buyers dried up. Many could no longer afford homeownership. Others sensing a shift in the market held off as the housing market corrected.
Just over a half-million (511,000) new homes were sold in July, with an additional 464,000 on the market.