Home sales across the United States may have enjoyed a sudden surge last June and July according to sales reports provided last August, reaching its highest level since February 2007. However, don’t expect this type of influx in home purchases in the upcoming months. While buyers may have showed signs of eagerness to buy homes due to the low rates a few months back, higher interest rates and even tighter lending standards this September have made buyers apprehensive in purchasing real estate. One of the markets that have been affected the most because of this situation is Phoenix’s new home market.
According to reports, request for homebuilding permits have gone down compared to the requests that were made during the previous year. Last July, the total permits that were requested by homebuilders totaled to a small fraction of 1,190 single family permits. That’s a nine percent drop compared to the amount that was tallied back in 2012. June didn’t fare any better as well with the total number of permits just hitting a measly total of 1,146.
Despite the reduced number of homebuilding permits that have been requested, the requests for new home permits showed some signs of improvement this period. Unlike the previous year were people exercised caution when purchasing a new place, the sale of new homes in the greater Phoenix area increased, giving real estate sellers a glimmer of hope that the market may not be in a dire situation as they feared, with the potential of it being able to do better as the next few months progress.
Of course, the slowing down of the new home market as a whole did not come as a surprise. Most experts had forecasted that the market would slow down after sales had reached its peak, especially after they noticed the decrease in buyer traffic this past August. Even for the new home market, there were enough tell-tale signs that served as warnings to real estate sellers that it would be experiencing a drop in sales.
One of the first signs that made real estate experts take notice was the few construction workers hired to develop new homes. It’s a fact that a high volume of workers being hired means that new structures are being constructed. Unfortunately, the lack of workers being asked to pursue the construction of new homes has contributed to these structures not being built quickly or even at all. With very minimal homes being constructed, it has prevented the new home market from attracting potential buyers to get a new home.
Another factor that contributed to decline in sales being experienced by the new home market is the scarcity of affordable lot areas in popular places around Phoenix. With most popular places being filled right now, most buyers would rather wait for new opportunities to open up instead of settling for a place that’s not in the vicinity they want. Just like everybody else, buyers would like to purchase homes that are located in areas that are close to the heart of the city. Factors that play a role in their decision is looking for a place that’s near their work or finding a home in a thriving community.
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