New Construction Home being Built

New Home Sales Surge in Metro Atlanta and Metro Detroit: A Hot Summer, but Is a Chill Coming This Fall?

The housing market trends have been sizzling this summer, especially in the new home sales and home construction sectors. With new home sales up a staggering 31.5% year-over-year in July, the real estate market in 2023 is showing no signs of cooling down. But could rising mortgage rates and shrinking home affordability bring a chill to the market this fall? Let's dive into the details.

A Boost in July: New Home Sales Up 31.5% Year-Over-Year

New home sales in July were up 4.4% compared to June, according to the Census Bureau. Home buyers have been turning to new construction as existing home inventory remains scarce in Metro Atlanta and Metro Detroit real estate markets. However, with mortgage rates now topping 7%, home sales are likely to cool.

Median Home Prices and Home Sizes: A Shrinking Trend

While new homes have been getting smaller, median home prices remain above $436,000. The median home price of new homes sold in July was $436,700, down 8.7% compared to a year ago. The median square footage of a home under construction was 2,191 in the second quarter, the lowest since 2010.

Supply and Demand: A Delicate Balance in Real Estate Economics

As new home sales have increased, home inventory continues to decrease, falling significantly lower in inventory compared to 10 months a year ago. Home builders are already sensing a shift in the real estate market, with some noting that spiking rates will deter home buyers from making a purchase for now.

The Impact of Mortgage Rates: A Key Factor in Home Affordability

Heading into fall, mortgage rates will continue to be a driving factor in new home sales. "With borrowing costs rising, buyers' purchase budgets are shrinking, leading builders to recalibrate their pipeline," said George Ratiu, chief economist at Keeping Current Matters.

Conclusion: A Market in Flux - Real Estate Forecast for Metro Atlanta and Metro Detroit

The new home sales market has been hot, but experts warn that rising mortgage rates and shrinking home affordability could mean a cooler market in the latter half of 2023. Builders and buyers alike will need to adapt to these changing dynamics as we head into the fall season.

Stay tuned to Fort Knox Realty for the latest updates on housing market trends, real estate investment, and property management in Metro Atlanta and Metro Detroit.