Author Topic: New Home Sales Plunge in May as High Interest Rates Weigh on Affordability  (Read 294 times)

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Offline mystery-ak

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New Home Sales Plunge in May as High Interest Rates Weigh on Affordability

John Carney 25 Jun 2025

U.S. sales of newly built homes dropped sharply in May, falling to their lowest level since October as high mortgage rates continued to strain affordability and sideline prospective buyers.

Purchases of new single-family homes fell 13.7 percent from April to a seasonally adjusted annual rate of 623,000, the Commerce Department said Wednesday. It was the largest monthly decline since the summer of 2021 and came in well below economists’ expectations.

The steep pullback signals persistent weakness in the housing market, where elevated financing costs have eroded purchasing power despite price incentives and mortgage-rate buydowns offered by builders. The average 30-year fixed rate has hovered near 7 percent in recent weeks, limiting what many households can afford and pushing others out of the market altogether.

The Federal Reserve has kept its benchmark interest rate steady since President Donald Trump took office, resisting calls by the president to cut interest rates despite inflation declining to below its two percent target in recent months. Fed chairman Jerome Powell has said that while low inflation would justify continuing the cuts the Fed began last year, while Joe Biden was still president, the central bank is holding off on further cuts because it expects tariffs will push up prices.

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https://www.breitbart.com/economy/2025/06/25/new-home-sales-plunge-in-may-as-high-interest-rates-weigh-on-affordability/
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Offline Free Vulcan

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Good, that market needs to deflate.
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Offline DefiantMassRINO

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The big impediment is the lack of availability of buildable (as allowed by zoning laws) land.

Much of the unused or underutilized land in my area is owned by Federal, State, and Local Governments or set aside as "conservation" land.

As part of the gentrification of my area, developers buy 1,000 sq ft ranch houses for the land they sit on, tear the building down, and erect a 2,000+ sq ft colonial or McMansion.  So, exisiting affordable housing is being destroyed to make way for new unaffordable housing because of Government land restrictions.

A viable way to solve this is to provide towns with bounties for each 3 bedroom, 1.75 bath unit of housing they add.  Cut state funding to towns, and make the towns supplement the reduced state funding with housing bounties.  Also tie state school funding to housing bounties. 

Maybe even tie state funding to towns based upon number or % of 3 bedroom, 1.75 bath dwellings exist in the town.

Those town that contribute to the solution get the reward; those towns that don't, get the shaft.

Prison cells and Over 55 developments no longer counted as "affordable housing" in the housing census.
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Offline Fishrrman

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Vulcan:
"Good, that market needs to deflate."

Agreed.

But... the high price of housing (which is probably not going to go down much) is as much a result of overpopulation as anything else ... probably moreso.

What was it Will Rogers said about buying land?

I realize you're in somewhat rural Iowa, but if you go to a larger city there... is it better today then, say, 30 years ago?

"More" (i.e., "growth") is not sustainable over the long term.
If growth is always "good", why are 40 million illegals in our country "bad"?

Is not "more" always "better"?

Aside:
This is why I believe the Japanese population decline will be advantageous to them in the long term (30-60-90 years).
With fewer people...
- the cost of housing will fall (too much supply, not enough demand)
- the wages will rise (not enough workers, who can then command more for their labor)
- the availability of health care will improve (fewer seeking it), and the cost will go down (not enough demand).
- less congestion, better livability.

How many members of this forum would enjoy living in the midst of New York City all the time?

Offline berdie

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I can't help but think that the exorbitant cost of insurance also contributes.

Offline Smokin Joe

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Good, that market needs to deflate.
I guess. Bought my house in the late 80s, and had 9.1 (fixed) as the interest rate (first time homebuyers). A few years later, after I got a bunch of refi offers, the company asked ME if they could lower the interest rate (no other changes), so I agreed.

If 7% is a spanking, the prices must be nuts.
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Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.

C S Lewis

Offline Smokin Joe

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@Fishrrman

Live in NYC?
Oh, Hell no!
Been there once, and I don't care if I never go back.
How God must weep at humans' folly! Stand fast! God knows what he is doing!
Seventeen Techniques for Truth Suppression

Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.

C S Lewis