Rising Mortgage Rates Hurt New Home Sales

Rising mortgage rates are hurting the sales of new homes. It's becoming a warning sign for builders ... and a sign of the times for homebuyers who can't afford what they want.

In short: sales of newly built homes are falling -- and market watchers say the main culprit is higher mortgage rates.

Sales fell in December, when the new tax law was signed, and then another 7.8 percent in January, when mortgage rates moved higher.

Texas-based real estate expert Alex Doubay says Houston has more options than other areas. He tells Newradio 740 KTRH that some homebuyers are choosing to stay put and refinance before interest rates even higher.

Nationally, supplies of new homes are the highest in four years. That's seen as a sign that new construction is increasingly beyond the means of some home buyers.

“Higher mortgage rates, combined with the loss of homeowner tax breaks in some of the nation's most expensive markets, are taking away buying power,” according to a CNBC report. “Mortgage rates moved a full quarter of a percentage point higher during January, from below 4 percent to about 4.25 percent. It then took off further from there.”

The national median price of a newly built home is now $323,000, a 2.5 percent gain compared with January 2017.

There’s a shortage of existing homes for sale – but in the new home market, supplies are at their highest levels in four years.

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