In Market Hampered by Interest Rates, New Homes are Leading the Way. Here’s Why.

Miami Herald, Nov. 20, 2023–Lew Sichelman
The new home market is thriving, mostly because builders can satisfy demand, even at higher loan costs. With apologies to Charles Dickens, the housing market has become a tale of two sectors. The existing home market has been stymied — largely by mortgage rates that have climbed into the 8% range, but also by a rock-bottom lack of inventory. The low interest rates people took advantage of during the pandemic have become a “disincentive” for those who would otherwise sell now, said Ali Wolf, chief economist at Zonda, an advisory firm. “They’re not eager to sell.” At the same time, the new home market is thriving, mostly because builders can satisfy demand, even at higher loan costs. According to Wolf, whose firm specializes in new construction, builders are gobbling up a third of all sales. That’s double their traditional share of 10% to 15%.
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