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New home sales in the U.S.-1
Economy

New home sales in the U.S. are falling: the reasons for the decline

01.07.2022
2 min read

New home sales in the U.S. fell short of experts’ expectations

According to official statistics, last month U.S. new home sales fell to 772,000 units. This figure was unexpected for the market, it is 2% lower than it was in the previous period. Analysts initially predicted the figure of 801 thousand. As a comparison: for the similar month of the previous year sales amounted to 832 thousand objects.
It should be noted that the indicator of sales in the primary market is very important for the analysis of the real estate market in the country as a whole. When there is an increase in the volume of homes purchased, then we can talk about the growth of spending by the American population. New homeowners spend more money on furniture, utilities, and repairs. Such spending contributes to the demand for a variety of goods and services. In addition, residential real estate accounts for more than 50% of the total construction segment in the U.S. All of these factors affect other sectors of the economy as well.
The rise of the real estate market was dramatically felt in early 2021 when the global economy began to recover intensively from the pandemic. The surge in demand was especially felt in the U.S. and Europe, where there is a shortage of supply.New home sales in the U.S.In the U.S., buyers’ main focus was on homes, fueled by low mortgage rates. As a result, demand for properties rose across the country, but supply was limited, contributing to record price increases in the market.
Secondary housing accounts for about 90% of the entire U.S. real estate market. The lack of variety of options for new construction is forcing buyers to actively purchase secondary housing, the number of which is declining rapidly. According to some experts, the available supply may be exhausted in the next few months.
As statistics from last year show, prices are rising in almost all areas of the United States. While previously the main demand was concentrated in large cities on the East and West Coast, now buy objects in the central regions. For example, home values in Tennessee increased by 10% over the year.
According to analysts, the increase in prices in the real estate market overrides the benefits of low mortgage rates, which also began to increase. The fact is that buyers now need more time to collect money for the down payment. This factor is quite critical for those who are buying their first home. Many investors are actively investing in the construction of new houses, but their cost is also likely to be high and affordable for a limited number of buyers. Meanwhile, the decline in new home sales suggests that a large number of Americans are postponing home purchases due to a lack of confidence in their income and rising costs.

Tags: Economy
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Chaslau Koniukh

Expert Chaslau Koniukh

Chaslau Koniukh – an expert in marketing and project management, IT consulting, international investments, investor, financial analyst. A commodity trader, private consultant, entrepreneur, lecturer, author of several articles on the stock market.

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Chaslau Koniukh – an expert in marketing and project management, international investments, financial analyst.

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