New-Home Sales Pause on Mortgage Rate Hike in July
Sales of newly built, single-family homes fell 13.4% to a seasonally adjusted annual rate of 394,000 units in July as higher mortgage rates prompted buyers to step back and reassess the market, according to newly released data from HUD and the U.S. Census Bureau. Every region recorded lower sales activity for the month, with declines of 5.7%, 12.9%, 13.4% and 16.1% reported for the Northeast, Midwest, South and West, respectively.
Meanwhile, the inventory of new homes for sale edged up to 171,000 units in July, which is a 5.2 month supply at the current sales pace. Commenting on the latest report, NAHB Chief Economist David Crowe said it’s likely that higher mortgage rates caused some buyers to temporarily delay signing a sales contract, but did not think July's weak activity marked the beginning of a downward trend. "There is still a great deal of pent-up demand for homes in markets nationwide, and builders continue to report improving consumer interest. This suggests that what we’re seeing is a temporary pause, and that buyers will return to the market once they are confident that the higher mortgage rates are here to stay,” he explained.
Proposed Fair Housing Rule Could Impact NAHB Members
The U.S. Department of Housing and Urban Development (HUD) recently published a proposed rule on Affirmatively Furthering Fair Housing. This proposed rule makes changes to the current process used by HUD grantees to report on how they are meeting their obligations to affirmatively further the purposes of the Fair Housing Act. HUD grantees are local governments and states that receive Community Development Block Grants, HOME Investment Partnerships, Emergency Solutions Grants, and Housing Opportunities for Persons With AIDS funds. Public housing agencies also are considered grantees for these purposes.
As the scope of the proposed rule is very broad, grantees are expected to delve deeply into possible causes of segregation, concentrated poverty and discrimination against protected classes of persons under the Fair Housing Act. This means grantees will look at land use and zoning policies, codes and ordinances, spending on public investments such as schools and transportation, as well as how federal funds are spent on housing and community development activities.
NAHB members could benefit by revised zoning ordinances and codes that open up more opportunities for development, or by new incentives for developers to work in revitalizing neighborhoods. However, there could be unintended consequences – for example, grantees may feel limited in what they can do and simply implement inclusionary zoning as a way to increase the number of affordable units in their communities. Or, grantees could set narrow targets for infrastructure investment or affordable housing financing that actually reduce opportunities for builders.
NAHB members and staff are carefully reviewing the proposed rule and will prepare comments by the Sept. 17 deadline, with special attention to unintended consequences but also to steps grantees can take to ensure that builders are part of the dialogue on solutions to affirmatively furthering fair housing in their communities.
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- Joanne Loftus