A survey of 273 builders by John Burns Real Estate Consulting in Irvine, Calif., found that the respondents’ sales of new homes declined by 4% in August from a month earlier. In past years, August typically has yielded a 2% gain from the July figure. Burns estimates that its survey, conducted Aug. 29 to Sept. 3, spans roughly 16% of new-home sales in the U.S.This is similar to the report from home builder Hovnanian earlier this week.
Perhaps more telling: far fewer of Burns’s survey respondents reported raising their prices in August than had in previous months. Of the respondents in August, 47% reported raising prices, 48% held prices steady and 5% lowered prices—the largest percentage of reductions since March 2012.
Those figures show substantial change from the results of Burns’s July survey in which 64% of builders reported raising prices, 36% held them study and one builder—statistically 0%—said it cut prices.
Builders have been raising prices significantly, and combined with rising mortgage rates, this has slowed down new home buying.
Click on graph for larger image in graph gallery.
However, as this graph shows (through July), new home sales are still historically low, and I expect sales to continue to increase over the next few years.
But I do think the new home price increases will slow sharply.