As mortgage rates hurdled over 6% in September, the highest level on record since the Great Recession, buyers are starting to become more hesitant during their home search. Many buyers are even being completely priced out of the market.
Concerns over rising interest rates, delays in project timelines, rising construction costs, labor shortages and other factors have led to a deceleration in the new construction home market.
The slowdown is happening nationwide. According to the National Association of Home Builders, new home sales were down 14% year-to-date in August.
All four U.S. regions recorded declines in new home construction with the Northeast down 5.6%, the South down 10.8%, the West down 16.7%, and the sharpest drop in the Midwest with new homes sales down 24.5%. While the slowdown is happening across all four regions, not all metros are seeing the same impacts.
Across major metros, Zonda reports that 96% of select markets increased quick move-in (QMI) count year over year. QMIs are homes that can be occupied within 90 days. The markets posting the biggest gains were Riverside/San Bernardino, Raleigh and Tampa.
Context is key though. QMIs are 32% higher than 2019 in Riverside but remain below pre-pandemic levels in Raleigh and Tampa. According to Zonda, Salt Lake City, Jacksonville and Las Vegas have seen the steepest growth in QMIs compared with the same time in 2019.
In many metros, sales are still growing when compared to the more baseline housing market of 2019, according to Zonda. In fact, markets like Indianapolis, Jacksonville and Miami have seen significant growth in their average sales rate in 2022, when compared to 2019.