Sales of newly built, single-family homes fell 8.1 percent to a seasonally adjusted annual rate of 406,000 units in June, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Sales numbers for May were revised downward to 442,000.
Households Priced-Out by Higher House Prices and Interest Rates
A question that NAHB Economics is often called upon to answer is “What happens to housing affordability?” when either interest rates or house prices go up. The NAHB Priced Out Model provides most straightforward answers. The model estimates that nationally a $1,000 increase in the home price leads to pricing out about 232,447 households out of the market for a median-priced new home. View the US income distribution and number of households priced out by a $1,000 price increase.
Prospective home buyers are also adversely affected when interest rates rise. The Priced Out Model estimates that approximately 1.1 million U.S. households are priced out of the market for a median-priced new home by a quarter point increase in the rate on a 30-year fixed rate mortgage. View the number of households priced-out by interest rate increases.
A related issue is the difference between builder costs and the final price of a new home. When construction-related fees are imposed, the final price of the home to the buyers will usually go up by more than the increase in the government fee, as other builder costs, such as financing and broker commissions, also rise. NAHB estimates that the add-on charges range from 0 percent if a fee is imposed directly on buyers to 39 percent if cost is incurred when applying for site development approval. View NAHB’s estimates of add-on charges on building fees.
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