Tampa: New Home Construction Surges Amidst High Mortgage Rates

New townhomes are seen under construction while building material supplies are in high demand in Tampa
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As U.S. mortgage rates reach a 20-year peak, Tampa Bay homebuilders are drawing in buyers with innovative financing schemes. Florida’s housing stock is being constrained by “golden handcuffs”, leading to a surge in interest in new builds, say property market experts.

Nationwide, the majority of homes sold are existing properties. However, sales of these homes have dropped 19% from the previous year. In contrast, sales of new homes have risen sharply by 24%, based on June’s statistics.

According to Jay Quigley, president of Greater Tampa Realtors, a potential buyer in Tampa Bay could inspect two almost identical properties – one a year old and the other brand new – and find a better deal on the new home.

Despite the average 30-year fixed mortgage rate being above 7%, many builders have connections with lenders that allow them to reduce the points and offer a mortgage rate closer to 6%, Quigley informs Axios. Gregory Hipps, an Axios Tampa Bay reader, shares his experience of selling his Odessa home at a significant profit early in 2021, just before the Fed began to raise interest rates.

Currently renting in Harbour Island, Hipps had hoped for a decrease in home prices and planned to purchase a property this year, a plan that did not come to fruition. If no attractive deals emerge in the coming months, he considers exploring other markets like Nashville or Austin, he shares with Axios.

Redfin reports that the number of new listings in the Tampa metro market has nosedived nearly 29% compared to June 2022.

Tampa: New Home Construction Surges Amidst High Mortgage Rates

Tampa: New Home Construction Surges Amidst High Mortgage Rates

Builder confidence is at its highest since June 2022, following a period of monthly declines throughout the year, as per the National Association of Home Builders. Axios’ Matt Phillips reports that some builders are introducing smaller, more affordable homes to attract first-time buyers. There’s also a growing interest in multi-family units in Tampa Bay, according to Quigley.

U.S. Census Bureau data and Axios Visuals demonstrate that new home sales in the South increased by 21.4% in June compared to a year earlier. Meanwhile, existing home sales dipped by 16.2% during the same period, according to figures from the National Association of Realtors.

Robert Dietz, the chief economist at the National Association of Home Builders, reveals that new homes made up almost a third of total inventory in May, surpassing their usual share of 10%-15%.

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