Looking for proven ways to win new real estate business? Today’s guest, Conor Kelly, shares what’s worked for him when it comes to making sales via social media. Tune in and hear how to create engaging content on TikTok, YouTube, and Instagram, content that will generate new real estate leads for years to come. Aaron and Conor also discuss why new builds are great for today’s buyers, how to manage a real estate team, and more.
Listen to today’s show and learn:
Conor Kelly’s start in real estate [3:25]
Why Conor and Aaron love social media [6:30]
Getting real estate leads from TikTok [11:21]
Why TikTok is such a powerful platform for Realtors [15:53]
It’s not too late to get on social media now [18:36]
How to handle inbound real estate leads [20:38]
Why new real estate agents should get on YouTube [23:09]
Tips for creating real estate content on YouTube [26:35]
Opportunities for buyers with new builds [31:08]
Advice on managing a real estate team [35:12]
Where to find and follow Conor Kelly [37:13]
Conor Kelly
Conor is a young and outgoing real estate professional that prides himself on his work ethic. His drive and competitiveness have led him to pursue a career in real estate. Before real estate, Conor was a Red Seal Plumber with over 9 years of plumbing experience. This experience has help shaped Conor’s “can-do” attitude and developed his willingness to do the things others won’t.
Before joining the workforce, Conor immersed himself in playing soccer, lacrosse, and working out. If you don’t find him on the field or at the gym, you will find him tuning into a basketball game as he is an avid Toronto Raptors fan.
Conor is always reading a book or consuming educational content as he is a habitual self-educator and self-improvement addict.
“Be obsessed or be average” –Grant Cardone.
Related Links and Resources:
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
Hear from seasoned successes and rapidly rising new agents in this special episode highlighting January 2022’s best real estate podcast moments. Guests share strategies, market predictions, opinions, and more. Listen and learn what these Real Estate Rockstars are doing to make 2022 their business’ best year yet.
Listen to today’s show and learn:
Why agents must add value [4:37]
How to get an offer accepted right now [5:43]
Advice on starting a real estate team [8:26]
How to succeed in today’s competitive real estate markets [8:39]
Stop looking at list price like it even matters [9:02]
Advice for people who are considering a career in real estate [9:51]
Why Karen likes FSBO leads [12:56]
Smart real estate investment strategies for the younger generation [15:03]
Giving clients extra value [17:36]
The business-owner mindset ness [19:08]
Leading with your core values to build a quality team [20:54]
Blake’s first real estate deal [25:08]
Planting seeds with potential clients as a new agent [26:27]
Advice on accomplishing your goals with visualization [30:29]
What Real Estate Rockstars taught Chaz about winning business [30:54]
Why new agents need to be intentional about their business [33:23]
The stock market crash and how it could impact real estate [34:31]
Don’t rely on headlines to make financial decisions [35:33]
The secret to successfully selling new builds [37:08]
Three things Robert wishes he knew as a new agent [39:09]
Related Links and Resources:
Thank You Rockstars! It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email. -Aaron Amuchastegui
In a clear sign of the times, Zillow has announced a partnership to syndicate new-construction listings on Redfin.
This means home shoppers will see more new builds than they did in the past, at a time when existing housing supply has rarely been lower.
It also means home builders will gain even more exposure, further boosting their already-high market share.
Once launched, Redfin will source non-MLS new-construction listings exclusively from their competitor Zillow.
And any new-construction listings that are available through an MLS will continue to be discoverable on the Redfin platform.
Zillow and Redfin Linkup a Boon to Home Builders
Zillow apparently has the largest selection of new-construction communities of all real estate U.S. websites.
This seems to be due to their existing partnerships with home builders, whereby they advertise their properties on Zillow.
To broaden their reach, these listings are slated to be syndicated to Redfin starting in the fourth quarter of 2023.
And Redfin users will get to take advantage of new features designed specifically to discover new-construction communities and connect with home builders.
Powered by Zillow’s Community pages, they’ll list all available homes for sale within the community, along with their amenities.
Shoppers will be able to view move-in ready homes, nearly complete homes, and even lots.
Those interested will find a direct link to the home builder’s website, along with pertinent contact information and sales center hours.
New Home Sales Up Big Year-Over-Year
The U.S. Census Bureau recently reported that sales of newly built single‐family houses climbed to a seasonally adjusted annual rate of 697,000 in June 2023, up an estimated 23.8% from a year earlier.
Meanwhile, the seasonally‐adjusted estimate of new homes for sale at the end of June was 432,000, which represents a 7.4-month supply at the current sales rate.
That’s down from 448,000 a year earlier, when supply stood at 9.5 months.
At the same time, Zillow reported that there were 28% fewer new listings in June compared to a year ago.
And Redfin noted that about one-third of all single-family homes available for sale were new construction, which is apparently a record-high share.
As you can see from the chart above (from early 2022), newly-built homes saw their market share rise from around 21% in 2019 to 34.1% by the end of 2021.
It appears their market share has climbed even higher since then, as existing supply continues to be hard to come by.
Where Did Existing Home Supply Go?
The National Association of Realtors (NAR) reported that there were just 1.08 million unsold existing homes at the end of June.
That was down 13.6% from a year ago when there were about 1.25 million existing homes available.
This represents a 3.1-month supply at the current monthly sales pace. Interestingly, it’s up slightly from 3.0 months in May and 2.9 months in June 2022.
As for why, demand is also low, mainly because housing affordability is so poor at the moment.
Between much higher mortgage rates and all-time high home prices, there aren’t many willing and able buyers out there.
Still, inventory remains in short supply, especially due to the mortgage rate lock-in effect. In short, existing owners are staying put because of the stark difference in interest rates.
Even if they’re able to sell their home and buy a replacement at today’s rates, going from a 2-3% rate to a 7% rate isn’t ideal for anyone.
Home building has also lagged for many years, so inventory wasn’t great to begin with over the past decade.
This explains why the median existing-home price was $410,200 last month, the second-highest price of all time and just shy of its record-high $413,800 in June 2022.
Home Builders to the Rescue
To help alleviate this supply and demand imbalance, home builders have been stepping up their game.
They’ve been offering both temporary and permanent rate buydowns to ease affordability concerns.
And because they often have their own financing departments, they’re able to get creative and really push down rates.
While someone purchasing an existing home might be subject to a 6-7% mortgage rate, the home builders could be able to offer a 5% mortgage rate.
This is a huge advantage for builders. Additionally, they don’t have to worry about a seller finding a replacement property.
As such, there’s no mortgage rate lock-in to worry about, nor is a contingent sale necessary.
Collectively, this may explain why the market share of new homes has increased so much. And why Zillow and Redfin want more new home listings on their platforms.
So if you’re a prospective home buyer, don’t be surprised if you see more and more newly-built homes versus existing homes in your searches.
Read more: Should I buy a new home or an old home?
Many predicted that COVID-19 would cause real estate markets to crash. But now, after one full year of economic uncertainty, U.S. housing markets seem hotter than ever. What gives? On today’s State of the Market podcast, Aaron and Matt Amuchastegui discuss what’s driving rapidly rising property values. Tune in and get their thoughts on whether or not we’re in a bubble. Plus, you’ll hear about the insane cost of lumber right now, the political implications of population shifts, and more.
Listen to today’s show and learn:
The insane cost of lumber right now [2:29]
Americans willing to pay more for existing homes than new builds [3:50]
Manhattanites opt for Brooklyn over Florida [6:54]
The political implications of population shifts [8:51]
Forbearance rates continue to drop [12:15]
Businesses report major labor shortages [15:20]
A potential fix for the unemployment problem [20:20]
Blockchain’s place in the real estate industry [23:22]
Matt’s advice for today’s homebuyers [25:36]
Final thoughts [27:10]
Matt Amuchastegui
Matt Amuchastegui has had the pleasure of working in many different industries and positions throughout his career. He has learned the trades of residential home building carpentry, construction management, commercialized construction such as building highway bridges and steel buildings, has worked in inside sales, worked as a purchasing manager, mortgage loan originator, held his real estate license in both California and Arizona, and finally he is currently working as a Real Estate Broker in the great state of Oregon.
Matt has been able to apply many skills from all of his past jobs, as well as his education from the University of Oregon to what he is currently doing. Matt prides himself in customer service and strives to make sure everyone that he works with, upon the completion of their transaction, feels as though he provided them with the utmost care, attention and customer service. It is also imperative that when he was involved with management and scheduling, that he built solid relationships with the employees and other contractors to help keep them on schedule and within their budget. Business, at any level, in Matt’s opinion is about respect and relationships.
Matt has enjoyed helping people find their dream homes and has also really enjoyed the business side of negotiating sales contracts. Learning to value homes and determine how much they were currently worth and would possibly be worth in the future was also something that served to be an asset for him. Having the opportunity to work in all fields related to home acquisition, sales and management has helped Matt to be versatile in his ability to take on any task!
Related Links and Resources:
Thank You Rockstars! It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email. -Aaron Amuchastegui
For the third consecutive week, mortgage rates managed to remain under 3%, dropping three basis points last week to an average of 2.96%, according to Freddie Mac‘s PMMS.
Despite consistent forecasts of a market with rising rates, the 30-year fixed rate mirrored more closely numbers borrowers saw back in February. Sam Khater, Freddie Mac’s chief economist, pointed to a golden opportunity for homebuyers given the recent economic resurgence.
“Consumer income and spending are picking up, which is leading to an acceleration in economic growth,” Khater said. “The combination of low and stable rates, coupled with an improving economy, is good for homebuyers. It’s also good for homeowners who may have missed prior opportunities to refinance and increase their monthly cash flow.”
But borrowers flush with cash are struggling to find a home to spend it on. Heightened demand continued to push mortgage applications down last week in what Mortgage Bankers Association vice president of economic forecasting, Joel Kan, called a “mixed bag of factors” — mortgage rates being one of them.
Even though inventory is grappling with the power that record low rates hold, borrowers are still racing to the end of the bidding line, as March housing starts jumped nearly 20% month over month to the highest level since 2006, per the latest report from Redfin.
Increasing Lending and Servicing Capacity – Regardless of Mortgage Rates
The low-rate environment won’t last forever, and both lenders and servicers need to be able to keep their costs down while managing volume fluctuations once things start to normalize.
Presented by: Sutherland
Although housing starts are rising, lumber prices have skyrocketed in the past 12 months, causing the average price of a new single-family home to increase by $35,872, according to the National Association of Home Builders.
Low inventory is still a thorny issue as April turns to May, but more new builds appear to be in the pipeline, according to Doug Duncan, Fannie Mae chief economist.
“The supply of existing homes for sale and an elevated level of new homes sold — but not yet constructed — should help bolster a strong construction pace of new housing starts moving into the spring buying season,” Duncan said.
Care homes operators have warned that a recent surge in mortgage rates and a delay to government reforms will sound a “death knell” for some UK providers.
The number of registered care homes fell to 12,224 on May 31 from 12,280 at the start of the year, according to data shared with the Financial Times by carehome.co.uk, a care home review site.
The rate of closures in England slowed in the first half of 2023, compared with the same period in 2022. However, a rise in mortgage rates threatens to increase the burdens on the care sector, compounding rising food and fuel prices and funding shortfalls.
“We are facing some extremely challenging times,” said Nadra Ahmed, chair of the National Care Association, a professional body. “There are vulnerable providers out there right now and there are a lot [of homes] that will be on the market.”
The challenges encountered by some operators would make their businesses “unviable”, she added, citing Pelham House in Kent as one of the latest to hit financial trouble. “Sadly they had to make the decision after 40 years to shut their doors,” she said.
“If you’ve got mortgages that’s going to have an impact on your ability to repay your borrowings.”
The Bank of England increased interest rates by 0.5 percentage points to 5 per cent in June in an effort to tame inflation, leading to rises in monthly mortgage repayments for borrowers on variable rates.
While interest rates are not expected to climb by as much as previously estimated following better than expected June inflation data last week, care providers are already feeling the heat.
Jay Dodhia, chief executive and co-founder of Serene Care, established with his wife Palvi, renovates and runs failing care homes. He said its model had been resilient but cautioned that rising interest rates could be particularly challenging for new builds.
“Most care homes are [on] variable rates — even when rates were very low it was very hard to get fixed rates on care home mortgages,” he said. “As the variable rate or the underlying BoE rate crept up, so have our interest payments.”
“Everything in isolation will affect you, if you put it all together — the rising inflation, utilities, food costs, staffing challenges . . . it could be a death knell for several [providers],” said Dodhia.
The number of councils in England reporting care home closures in their area rose to about 44 per cent at the end of May 2023, according to the Association of Directors of Adult Social Services, a charity.
Natasha Curry, deputy director of policy at the Nuffield Trust, said in 2019, before the coronavirus pandemic, the level was about a third.
“With borrowing rates also rocketing, it’s not a surprise that we’re seeing more closures of care homes and I think it’s inevitable that trend will continue,” said Curry.
During the Covid crisis, an injection of emergency government funding had helped to stabilise the market, cushioning the impact of falling occupancy rates. But that funding had ended.
Cathie Williams, joint chief executive of the Association of Directors of Adult Social Services, said councils had a duty to provide “continuity of care” for residents if a home closed.
But a decade of austerity, Brexit, the pandemic and staff shortages compounded by surging living costs had contributed to “a considerable lack of resilience” in the sector.
Where care places existed, “it tends to be because they’re in the wrong place or the wrong kind of care home or the quality is not good enough”, she added.
Health leaders warned of the effect of diminishing capacity in social care on the wider health system. Matthew Taylor, chief executive of the NHS Confederation which represents health organisations across the UK, said health leaders knew “all too well the impact that a lack of social and residential care has on the NHS”.
The support provided to residents in care homes could prevent avoidable hospital admissions. Moreover, a lack of available care home places for patients who could otherwise have been discharged from hospital could create “a log jam effect in A&Es with long ambulance waits”, Taylor added.
“The good news is we can see the rate of closures slowing in England and Wales although unfortunately Scotland has seen a rise,” said Richard Stebles, head of business intelligence at carehome.co.uk.
“In order to stay sustainable, we are likely to see care providers trying to attract more privately funded residents who pay higher fees than those funded by the local authority.”
Dodhia said the average fee for publicly funded social care bed should be £900 per week. But local authorities are often paying about £600 to £700 a week; some are willing to spend just £490 a week.
Care home operators had hoped for more funding from local authorities following a “cost of care exercise” that sought to generate a shared understanding of the cost of adult social care. But some councils struggled to increase payment and reforms were pushed back to October 2025.
Providers have also fought to access the £200mn earmarked for the NHS crisis plan, which aimed to move patients from hospitals to care homes.
A “winter discharge fund” had been announced, said Dodhia, but “local authorities didn’t really want to spend it”. He added: “They knew that as soon as that funding ran out then the residents would be left vulnerable, because they can’t continue to fund [the scheme].
“We heard about all these great support plans but we didn’t see any of it,” he said.
The Department of Health and Social Care said it was investing up to £7.5bn in social care over the next two years — “the biggest funding increase in history” — to boost capacity in social care, including £1.4bn that local authorities could use flexibly, including to pay social care providers more.
It added: “Despite the pressures the adult social care market faces, the number of adult social care locations registered with the Care Quality Commission has remained stable, and there are 6,600 more home care agencies in England now compared to 2010.”
On Q Financial added loan originators to its biggest markets including Arizona, Washington and California as well as other states – Tennessee, Nevada, Utah and Colorado.
Some LOs get hired into an existing branch but typically, LOs who were working in the same branches are placed together in a new physical branch.
Licensed in 46 states, On Q Financial originated $2 billion in 2022 — 85% of the volume coming from its retail channel and 15% coming from the correspondent and wholesale channel, according to Lamb.
Following one major layoff and furlough in 2022, the Arizona-based lender eliminated costs and is positioned to grow revenue, executives said.
“The way I look at it is, most of us on the lending side have at this point cut or right sized or eliminated as much as we possibly can on the cost side of the business last year,” Lamb said.
“Most of what we’re adding is production headcount. There are some rent expenses that go with it (…) We’re bringing on production that will generate new revenue for us. We’re being very careful in adding any expense associated with that production.”
The lender has brought on furloughed producers and operations staff on a selective basis as it grows production.
Tapping into homebuilders’ network
“We have a really long and strong history of working with homebuilders. We work with a number of them where we have very strong preferred and very tight relationships with home builders,” Lamb said.
New builds are a bright spot in a bleak housing market as buyers seek new builds due to the lack of resale inventory.
In April, On Q Financial and HomeCo Partners formed a joint venture named Partners United Mortgage – a consortium of real estate brokerages and a builder, HousingWire previously reported.
The goal of the JV is to enable smaller real estate firms and homebuilders to get into the mortgage side of the business by becoming one of the partners in the JV.
On Q Financial aims to have a relationship where its loan officers can cultivate relationships with small builders and real estate brokerage partners by helping a first-time homebuyer transaction or existing lending transactions.
Lamb noted mortgage application activity is better than rate lock and funding activity, which implies that buyers haven’t been able to find homes yet.
“We’re engaged with other potential partners to go into that JV and expand it,” Lamb said.
The spring homebuying season has come and gone. And while it wasn’t a complete bust, it certainly didn’t meet the projections real estate professionals had hoped for.
Looking ahead to the rest of the year, housing experts are revising their early forecasts for the 2023 market to reflect a less rosy view. The question on everyone’s mind is the same: When will things go back to normal?
There’s no crystal ball to tell us what lies ahead, but here’s what industry experts predict will happen in the back half of 2023.
Home sales
No one expected home sales to keep up the torrid pandemic pace of over 5 million homes sold annually. Experts’ initial forecast for 2023 predicted sales would drop between 7% and 16% from last year. With mortgage rates staying well above 6% (and seemingly on their way back to 7%) and more buyers staying on the sidelines because of the lack of affordability, those forecasts hit the nail on the head.
“The second half of the year is shaping up to be fairly boring with very little prospect of sales shifting up or down through the rest of the year,” says Taylor Marr, Redfin’s deputy chief economist.
The expectation continues to be that home sales will decrease to an annualized pace of between 4.2 million to 4.5 million homes, or about 16% below 2022’s pace.
The one bright spot in the sales department is new construction homes. The supply of existing homes is low, so homebuyers are increasingly turning to new builds. Plus, builders are offering several incentives, from rate buydowns to price discounts, that make a new home purchase more attractive — and affordable.
According to the U.S. Census Bureau, sales jumped by more than 12% between April and May (the third consecutive month of increasing sales). Compared to May 2022, sales increased by a whopping 20%.
Mortgage rates
When mortgage rates dropped to 6.09% in early February, there was high hope they would continue to move lower or stay in the low 6% range. Some expert forecasts said rates would climb as high as 7.4%, but a few predicted they would fall to around 5.5% by the end of the year.
In any case, inflation is taking its sweet time in returning to the Federal Reserve’s end goal of 2%. Add in bank failures, recession fears and a labor market that refuses to break, and you’ve got a perfect recipe for stubbornly-high rates.
Two more increases to the federal funds rate are likely this year, which won’t help bring rates down anytime soon. Experts now believe mortgage rates will remain between 6% and 7%, slowly declining toward a range of 6.5% and 6.1% by year’s end.
“That clears the way for continued tight monetary policy and generally higher mortgage rates for the near future,” says Jeff Tucker, senior economist at Zillow.
Home prices
Home price growth has slowed, but the lack of enough inventory to satisfy buyer demand has kept the median home price reasonably stable at about $396,000. Nationally, home prices could end the year less than 1% lower than their 2022 peak, says Danielle Hale, chief economist at Realtor.com.
Regional markets, however, are seeing a lot of variance. Going forward, experts say, prices are likely to hold steady in more affordable markets in the Northeast and Midwest (like Boston and Chicago) while prices in the West and some “overheated” cities in the South (like Sacramento and Austin) will see prices move lower. Regardless of the region, affordability will continue to be an issue, especially for first-time buyers.
High purchase costs, low housing supply and lower rental costs are all factors impacting home sales, says Hale, causing some potential buyers to “delay buying their first home, dampening demand for home sales in the year ahead.”
Inventory
There were high hopes for a rebound in the housing supply at the start of 2023, with forecasts predicting the number of existing homes for sales would jump as much as 22%. That didn’t happen.
In reality, mortgage rates have stayed elevated, and would-be home sellers who bought or refinanced at 3% are deciding to stay put. The current market has about a 3-month supply of homes for sales; a “healthy” market has a 6-month supply.
Even if new listings start to come onto the market, that won’t improve supply this year. Those sales, Marr says, will “likely to be pushed back to the spring selling season.”
Ads by Money. We may be compensated if you click this ad.Ad
More from Money:
9 Best Home Equity Loans of 2023
A Record-High Share of Homebuyers Are Looking to Relocate Right Now
Homebuyers didn’t get any relief in mortgage rates this week, leaving them with little choice to either move forward with their purchase plans at elevated rates or stick to the sidelines.
The rate on the 30-year fixed mortgage edged higher to 6.71% from 6.67% the week prior, according to Freddie Mac. Rates have swayed between 6% and 7% since the start of the year, showing little signs of softening this summer.
The high rates have kept many homeowners from listing their homes, driving up prices on what’s left in the market and creating unfavorable conditions for the buyers still on the hunt.
“That move-up buyer is pretty much gone,” Luis Padilla, CEO of Oceanside Realty and Padilla Team in Miami, told Yahoo Finance. “It’s what’s putting the brakes on the market and inventory.”
Rate-trapped homeowners stall inventory growth
The latest data showing homes that went into contract in May underscores the inventory challenges.
Pending home sales, a leading indicator of the housing market’s health, dropped 2.7% in May from the previous month, much more than what was expected. That’s largely because buyers couldn’t find enough homes to make a deal, NAR chief economist Lawrence Yun said, noting that each listing received three offers on average.
The shortages have persisted. There were 459,000 single-family homes on the market for the week ending June 26, according to Altos Research. While up 1.9% from a week prior, that’s 10% fewer homes compared with a year ago.
“Normally by mid June you’d have 10-20% more homes on the market than over the holidays,” Mike Simonsen, CEO of Altos Research, wrote in his blog. “But this year we have fewer.”
The biggest reason for the dearth of properties is reluctance from homeowners, most of whom have a much lower mortgage rate than the prevailing rate.
“That move buyer doesn’t want to give up that 3% mortgage rate,” Padilla said. “They would rather commute 30 minutes to work than pay hundreds more on a monthly mortgage payment.”
Buyers move on to new homes
So what’s a homebuyer to do? Many of them who are still in the market are looking at new builds.
That was one factor that pushed the volume of mortgage applications for purchases up 3% for the week ending June 23, according to the Mortgage Bankers Association (MBA). That’s the third week of increases and the highest level of activity since early May.
“New homes sales have been driving purchase activity in recent months as buyers look for options beyond the existing-home market,” MBA Deputy Chief Economist Joel Kan said in a statement. “Existing-home sales continued to be held back by a lack of for-sale inventory as many potential sellers are holding on to their lower-rate mortgages.”
Though new inventory offers a glimmer of hope, very few homes that are available are affordable to entry-level buyers.
Padilla noted that while the share of active listings had increased 19.5% in May in the Miami-Dade area, the average cost of a single-family home was $620,000, up 7.8% from a year prior. Prices for condos increased 6.5% to $415,000.
That tracks with national data this week showing prices have increased for three months in a row, making conditions worse for buyers out there.
“This is good news for homeowners gaining more equity,” Mark Fleming, First American’s chief economist, previously told Yahoo Finance. “But it will pressure affordability for the potential first-time homebuyer.”
Gabriella is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.
Click here for the latest economic news and economic indicators to help you in your investing decisions
Read the latest financial and business news from Yahoo Finance
New home sales are moving at their fastest pace in over a year as builders continue their efforts to make up for an inventory shortfall, according to the Mortgage Bankers Association.
Applications for new home purchases in May were up 16.6% from the same time last year and 8% greater than in April, the MBA said in its latest Builder Application Survey. It’s the fourth consecutive month with a year-over-year increase after a slowdown last spring. Housing starts in May also surged to a seven-year high.
“Our estimate of new home sales also jumped in May, up 16 percent to the fastest pace of new home sales in 15 months,” said Joel Kan, MBA vice president and deputy chief economist, in a press release.
The news comes as current homeowners stay on the sidelines given that mortgage rates are expected to stay above 6%, with the for-sale supply of homes nearly 40% below mid-2018 levels, according to Redfin. The MBA found that the supply of new properties is running at a seasonally adjusted rate of 755,000 units in May.
Builder sentiment in June is at an 11-month high, according to a recent National Association of Homebuilders/Wells Fargo survey. Respondents cited the inventory crunch and the Federal Reserve’s slowing rate hikes as cause for optimism.
Prospective borrowers purchased 64,000 new homes last month, a 10.3% jump from the 58,000 they bought in April, the MBA estimated. The average loan size for new builds was $403,581 last month, compared to the mean amount of all purchase loans at $425,100 in early June, according to the MBA.
Conventional loans accounted for 67% of application volume, while Federal Housing Administration mortgages made up 22.8% of applications. That share of FHA loans for new purchases was greater than in the market at-large, where FHA loans in early June accounted for 13% of all mortgage applications.
Department of Veterans Affairs loans accounted for a 10% share of new home applications and 0.3% of volume were United States Department of Agriculture applications.
The MBA gathers application volume from mortgage subsidiaries of home builders nationwide, while the U.S. Census Bureau conducts new home sales estimates, counted at the time of a contract signing.