New Home Sales on the Rise in March 2023, but Housing Shortage Still Looms: Insights from Experts

In March 2023, new home sales jumped by 8.8%, according to the Census Bureau. This surge in sales of newly built homes is attributed to the scarcity of used homes and reflects a positive trend in the housing market. With a pace that could result in 693,000 sales over the year, homebuilders are showing confidence in the market despite rising interest rates.

On the other hand, sales of existing homes have been stagnant due to homeowners holding onto their low fixed mortgage rates despite the increase in interest rates. However, builders are offering incentives such as price reductions, mortgage rate buy-downs, and covering buyers’ closing costs to attract more buyers.

Despite high mortgage rates making it challenging for first-time buyers, these strategies have helped maintain a healthy pace of new home sales according to experts. While the data on new home sales is encouraging, it should be interpreted with caution due to potential fluctuations and margin of error in the bureau’s figures.

If the trend continues, increased homebuilding could alleviate the housing shortage in the U.S., which has contributed to rising prices and overall economic challenges. However, there is still a significant housing deficit in the country. Robert Frick, a corporate economist, emphasizes the need for lower mortgage rates to drive more construction and address the shortage of homes needed to accommodate American families.

In summary, while new home sales have shown positive growth in March 2023, there is still much work to be done to address the housing shortage and overall economic challenges facing America.