Local News and Information
Rising mortgage rates approaching 7% along with declining builder sentiment stemming from stubbornly high construction costs and weakening consumer demand pushed new-home sales down at a double-digit rate in September.
Following a brief uptick in August, sales of newly built, single-family homes in September fell 10.9% to a 603,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“Builders continue to face lower buyer traffic due to declining affordability conditions as the housing downturn continues,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB). “Builder sentiment has declined for 10 consecutive months. The entry-level market in high-cost areas has been particularly affected, with growing numbers of first-time and first-generation buyers priced out of the market.”
“New home sales are down 14.3% on a year-to-date basis compared to 2021,” said NAHB Chief Economist Robert Dietz. “Moreover, sales are now down 1.9% on the same basis compared to 2019 levels that were prior to the Covid-related changes to interest rates.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the September reading of 603,000 units is the number of homes that would sell if this pace continued for the next 12 months. Notably, the new home sales data do not incorporate cancellations, which according to NAHB survey data have more than doubled compared to a year ago.
Here in the South, new home sales fell 12.1%, but all regions dropped including an 8.1% decrease in the Northeast, 21.2% in the Midwest and 17.6% in the West.
However, some local builders in the Chattanooga area are reporting positive stories. “There is a very compelling financial benefit to buyers purchasing a new GreenTech home today in a high inflation/appreciation environment. GreenTech is focused on buying down interest rates and locking rates to help buyer monthly payments remain cheaper than market rental rates. Additionally, the total cost of ownership of a new GreenTech home is lower than an older home when you include maintenance costs,” says Chad Tyler, CEO of GreenTech Homes.
If you’re ready to start a new home journey or remodeling project, visit the membership directory at www.HBAGC.net for a list of professionals to help you.