New home sales keep rising

SALT LAKE CITY — Interest rates are finally decreasing, but new homebuyers might find it difficult to find a new home as a new report shows new home sales continue rising this year.

According to the U.S. Department of Housing and Urban Development’s latest report, the number of new home sales rose for the third time in a row in May. Going up 12.2% in April and up 20% over the last year.

The average sales price of new houses sold in the country on May 2023 was $487,300.

Heather Groom, a licensed realtor at KW Westfield spoke to Dave and Dujanovic to discuss if Utah was also seeing similar trends in new home sales rising.

Interest rates

In the past few years, we got too comfortable with 2% and 3% interest rates, but Groom said when looking at the bigger picture, interest rates are not too high.

“Even though we may not like 6%, it’s not historically high. Back in the day, there were 18% interest rates that our parents had.”

Last year, the market slowed down when interest rates took a spike, and people began to wait to purchase a home. Groom said home buyers are now starting to get back into the market expecting that interest rates will drop possibly next year.

“What we’re seeing is definitely home sales are coming back, they’re coming back strong… We’ve got a lot of people that now who are starting to Google and say, hey, where’s a good place for me to move? Or what’s a business-friendly state? Utah has historically, in the last two years, been winning all these awards.”

New home sales

Utah is seeing a lot of demand for growth, with many new construction house projects all over the state. According to Groom, people are drawn to new homes because they also see it as an investment.

“Millennials waited to purchase for a number of years and now kind of these younger generations that are starting to say, okay, I want my own place.”

There are many programs to help first-time homebuyers, and with the increased options in new builds, like condos and townhomes, Groom said it is a great time for many. People also like that there is less risk of repairs or issues happening with newer construction homes.

Second-time homebuyers, on the other hand, can’t really justify moving into something bigger.

“I’m a little bit more concerned about this kind of second time or middle market where they aren’t, they’re not able to really afford the payment because the interest rate is now up,” Groom said.

Looking into the future, Groom believes Utah will continue to grow, “I think the secret is out. We’re not one of the best-kept secrets anymore, and that’s what I’m hearing from even my buyers that are moving here from out of state.”

Related:

• Salt Lake seeing highest drop in home sales, national report finds
• Home prices are down and so are the size of apartments
• Here are the US cities where home prices are actually falling