New-home sales burble higher
There are signs of life in new-home sales, but the bigger existing home market looks dead.
Mortgage rate lock continues to choke the life out of US existing-home sales, with sales sliding to a 14-year low in September.
But new-home sales have continued to creep higher, as would-be buyers turn to new construction in search of inventory.
Just-released numbers from the US Commerce Department showed sales of newly constructed homes climbed to a seasonally-adjusted annual rate of 738,000 last month, the highest in over a year.
The uptick in activity is likely due to mortgage rates, which flirted with falling below 6% in September before bouncing back to about 6.5% in recent weeks, potentially quelling activity once again.
It’s worth noting that despite being the sole meaningful source of home inventory, builders still have to sweeten the deal for buyers who are facing the most unaffordable market in decades.
In recent days, the market has beat up stocks of major builders like PulteGroup. Pulte posted better-than-expected quarterly numbers on October 22, but the stock plummeted and had its worst day in more than two years, after executives said it would have to continue offering costly incentives such as mortgage-rate buydowns to lock in sales, likely lowering future profit margins.
