Homebuilders may finally be feeling the blowback of continuous rising prices and a defeating seller’s market. For its third consecutive month, homebuilder sentiment has declined, this time seeing a drop of 5 points from 80 (July 2021) to 75 in August. This brings the score to its lowest point in thirteen months.
While there may be multiple of factors contributing to this decline, one of the major elements behind this decline is most likely high costs associated with buying a new home build. For the month of June, a new-home’s average sale price was $428,700. From May to June, the average loan size for a new home increased from $384,323 to $392,370, which demonstrates just how quickly these prices are appreciating.
With mortgage rates recently increasing and existing-home inventory slowly improving over the past few months, the demand for new-homes may soon drop to align with the sentiment’s projection. Although some supply costs, such as lumber, have seen continuous drops in price since their highs earlier in the year, builders are still attempting to recoup costs put forward to initially obtain materials. Additionally, supply chains have slowed the development of projects, leaving some buyers with a sense of uncertainty and potential hesitancy to commit when considering a new property.
Bottom Line
While homebuilder sentiment has taken a slight tumble in August, anything above 50 is still considered positive. Connect with your buyers today to highlight the advantages to purchasing a new build and benefits it can yield.
