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This Week In Real Estate – May 28, 2023

Central Oregon Real Estate - This Week In Real Estate

New Home Sales Surge Amid Low Inventory.

While options of existing home inventory continue to be thin, the beneficiary of this housing cycle is the new home market. The U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported, this week in real estate, that new home sales surged for the second consecutive month, increasing 4.1% to a 683,000 seasonally adjusted annual rate. This is the highest level since March 2022. April’s data showed a jump for new homes available for sale and sold that had not started construction. Sales of homes not started construction reached their highest mark in more than a year. Homes available for sale that had not started construction were at the highest pace since October of last year. While sales of new single-family homes typically account for less than 10% of national home sales, this April, the share increased to about 14%. Below are a few newsworthy events from the fourth week of May that influence our business:

New Home Sales Rise As Buyers Run Out Of Options In The Resale Market.

An ongoing and persistent lack of homes in the resale market is pushing more home buyers into new construction, which caused sales to surge for the second month in a row. U.S. new home sales rose 4.1% to an annual rate of 683,000 in April, from a revised 656,000 in the prior month, the Commerce Department reported Tuesday. The jump exceeded expectations on Wall Street. Economists had forecast new home sales to fall to 669,000 in April. Home builders are constructing new homes at the highest level since March 2022. Sales of new homes are up nearly 12% compared to last year. “Builders continue to benefit from the lack of inventory in the resale market and the room to buy down prospective buyers to lower rates,” said Neil Dutta, head economist at Renaissance Macro Research. Full Story…

Do Rates Care About Debt Ceiling?

It was nearly impossible to avoid news regarding the debt ceiling this week, but how much does it actually matter? The debt ceiling has to be increased periodically in order for the US government to borrow enough money to fund day-to-day operations. There’s theoretically a point at which the government doesn’t have enough money to make payments that it had already agreed to make in the past. That money can come from the issuance of Treasury debt (i.e., borrowing) or from sources of revenue (such as taxes). In that theoretical scenario, the US could default on its obligations and that would be incredibly serious. A missed payment on Treasury bills, for instance, could cause major fallout in financial markets. It has never happened and is all but guaranteed to not happen this time either. That leaves us with what is mostly an exercise in political theater and/or brinksmanship on both sides of the aisle. Despite that, some traders take logical, defensive measures JUST IN CASE this happens to be the time when we finally see a default. Those defensive measures cause volatility in certain corners of the bond market that end up spilling over to other parts of the market. This has nothing to do with the debt ceiling and everything to do with the steady message from the economy and the Federal Reserve. To be fair to the Fed, their message will depend on inflation and the economy, and the Fed’s reaction function has been consistent: until inflation is clearly heading back toward 2% targets, rates need to stay high. Full Story…

Contract Signings Flat, More Inventory ‘Critical.’

To get more home buyers moving, they’re going to need more choices of homes for sale. Pending home sales recorded no change in April. The latest reading from the National Association of REALTORS’ Pending Home Sales Index – a forward-looking indicator of home sales based on contract signings – showed contract signings flat in April compared to March. “Not all buying interests are being completed due to limited inventory,” says Lawrence Yun, NAR’s chief economist. “Affordability challenges certainly remain and continue to hold back contract signings, but a sizable increase in housing inventory will be critical to get more Americans moving.” Existing-home sales in April posted a 3.4% month-over-month drop in April, NAR reported last week. The housing market has remained sensitive to ongoing inventory shortages and even recent small fluctuations in mortgage rates, economists say. A bright spot for the housing market lately has been the new-home market, which has been answering the call by providing inventory to buyers starved for greater choices. New-home sales jumped about 4% in April. Full Story…

Originally compiled & posted by Jason Waugh on the Berkshire Hathaway HomeServices Northwest Real Estate company blog.

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Mitch Darby

I am a real estate broker, architect (both licensed in the State of Oregon), and life-long Oregonian. If you are looking to buy or sell, I can help! I have Northwest Knowledge and am proud to be associated with Berkshire Hathaway HomeServices - Real Estate's Forever Brand!

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