That arbitrariness is now happening among homebuyers. But regular homeowners looking to sell have yet to figure it out.
By wolf richter For wolf street,
Homebuilders, unlike homeowners who want to sell homes, are not emotionally attached to prices. Their business is to build homes and sell them no matter what interest rates are doing, and they can’t sit there and wait praying, “This too shall pass.”
So, unlike many homeowners who are thinking of selling, home builders began to cut prices in the fall of 2022, and they used mortgage-rate buyouts and other incentives to increase demand for their unsold inventory. was done to encourage And it worked. Substantial reduction in prices always works.
The median price of new single-family homes sold in April fell to $420,800, down 8.2% from a year ago, and 15% from the peak in October, according to data from the Census Bureau today. This does not include mortgage-rate buydowns. A separate measure, the median price of new single-family homes fell 11% year-over-year to $501,000.
New home sales ticked up to a seasonally adjusted annual rate of 683,000 homes, in response to lower prices, mortgage-rate purchases and stimulus.
Not seasonally adjusted, and in terms of actual sales, not an annualized rate, homebuilders sold 62,000 homes in April, down just a hair from April 2019, but down sharply from during the pandemic and during the 2001 to 2006 housing bubble1 :
Inventories for sale in all stages of construction fell to 422,000 homes, not seasonally adjusted, roughly even with April last year, as homebuilders managed to reduce part of their backlog of inventory.
Supply has also shrunk, from an astronomical 10 months last July to 7.6 months in April.
Arbitrage with previously owned homes.
Homebuilders have attracted some buyers who would have bought pre-owned homes by cutting prices that homeowners used to abhor.
It’s getting wilder now among homebuyers: Even as price cuts and incentives brought new home sales back to 2019 levels, sales of existing homes again hit post-lockdown lows in April and then the housing bust 1 fell to the level
While the prices of previously owned homes have also fallen, they are down only 2.1% year-on-year. and sales have droppedBecause potential sellers are still trying to avoid this situation, while at least some buyers have switched to buying from professionals who know how to offer deals.
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