New-Home Sales Surge, Biggest Jump Since Dec. 2022

Sales of newly built homes in the U.S. surged in March, marking the most significant increase since December 2022. The robust demand propelled sales to their highest level since September 2023, just before mortgage rates began to climb to 7%. According to the Commerce Department’s report, new-home sales rose 8.8% to an annual rate of 693,000 in March, surpassing economists’ expectations of 669,000.

The Northeast region led the growth, with new-home sales soaring by 28%. However, sales in the Midwest saw a more modest increase of 5.3%. Despite concerns about rising mortgage rates, builders are still experiencing strong demand from buyers, albeit with some caution. Higher borrowing costs have led builders to scale back on constructing new homes in March. Still, they remain relatively optimistic about the market, leveraging sales incentives such as price reductions and mortgage-rate buydowns to maintain buyer interest amidst the challenging rate environment.

Fannie Mae: Mortgage Rates Above 6% Until 2025

Fannie Mae has revised its forecast for mortgage rates, now predicting they will remain higher for longer than previously anticipated. Initially expecting rates to drop below 6% by the end of 2024, Fannie Mae now forecasts a higher average rate of 6.4% by the year’s end, with rates expected to stay above 6% for the following two years before gradually declining to a flat 6% by the fourth quarter of 2025. This adjustment suggests a longer-term trend of higher mortgage rates, contrasting with the earlier forecast of a more rapid decline.

Freddie Mac’s latest data indicates that the average rate for a 30-year fixed mortgage currently stands at approximately 6.74%, reflecting a notable increase from the recent low levels. After reaching a peak of 7.79% in late October, rates began a steady decline until mid-January, when they reversed course and started to rise again, highlighting the volatile nature of the mortgage market.

Judge Approves NAR Settlement, Allowing Broad Changes

A federal judge has approved the agreement between the National Association of Realtors (NAR) and plaintiffs suing over commission rules, signaling significant shifts in how real estate professionals are compensated. Judge Stephen R. Bough approved the settlement, finding its terms fair and reasonable. This agreement requires the NAR to allocate $418 million over four years to a settlement fund and make other concessions.

While the settlement awaits final court approval in November, Judge Bough’s ruling signals a significant change in the real estate landscape. The NAR is poised to implement transformative rule changes, including eliminating fixed commission rates. Previously, sellers were typically charged a 6% commission fee, but with this settlement, buyers will have the freedom to negotiate commission fees before making a purchase. These changes are expected to be enacted by July and rolled out nationwide by mid-September.

Source:

Vaimberg, Ron. “Weekly Newsletter – January 6, 2023.” Ron Vaimberg International, Ron Vaimberg, 6 Jan. 2023, https://rvionline.thinkific.com/courses/take/rvi-weekly-newsletter/texts/41523497-weekly-newsletter-january-6-2023.