As new home sales soar, analyst says entry-level price is redefined higher
Sales of newly built homes in August hit the second highest level in over a decade. Those numbers were released just after a homebuilding analyst at Raymond James upgraded Toll Brothers, Lennar and KB Home to "outperform."
"We had been on the road with some builders, and they were displaying levels of confidence in current conditions we probably hadn't seen in a couple of years," said analyst Buck Horne.
Not only were builders confident, but buyers were buoyed by a sharp drop in mortgage rates. The average on the popular 30-year fixed hit a recent high of 4.35% in late April, according to Mortgage News Daily, and then began falling. By the end of August it was right around 3.5%, giving buyers significantly more purchasing power than they had in the spring.
"There was a question of whether buyers would respond to lower mortgage rates and they've decisively answered that question, and answered by quicker sales paces," said Horne.
The buying, however, was all in the mid to luxury sectors. Just 10% of sales were for homes below $200,000, which used to be considered the entry-level for the builders. The biggest gain in sales was at the highest end. The number of homes priced above $750,000 were up about 60% annually.
"Entry level has been redefined," said Horne. "To the extent that entry level used to be $200,000, the realistic number is more like $300,000 is the new entry level."
https://www.msn.com/en-us/money/realestate/as-new-home-sales-soar-analyst-says-entry-level-price-is-redefined-higher/ar-AAHPCNN?li=BBnbfcN
I wish you could find a home for $300,000 in the Puget Sound region.
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