The housing market just shifted, leaving a surplus of newly constructed homes available on the market.

What a change we have seen in the housing market in just the last two months. Mostly due to the 2022 usual suspects: historically high inflation and rising interest rates. In the first quarter, while interest rates and home inventories were still very low, buyers were flooding the housing market to pay top-dollar under previously unthinkable terms. To win a bid, buyers were making cash offers and waiving inspections, sometimes without even stepping foot on the property!

According to Zillow, the typical New Jersey home value in April 2022 was $454,982. This value is seasonally adjusted and only includes the middle price tier of homes. That represents a 15.9% increase over the past year.

Since the start of the year, however, mortgage rates have crept higher and higher, but that didn’t seem to scare off buyers until the Federal Reserve began increase the United States Fed Funds Rate in March.

2022 Mortgage Rates


The increasing home prices, combined with higher interest rates, have finally shrunk demand for new homes. According to Census Bureau data released on May 24th, new-home sales fell 16.6 percent in April, leaving the inventory of newly built homes to jump sharply to a nine-month supply. The new construction industry is considered to be balanced between buyer and seller when there are only enough unsold new houses to match six months of sales.

Home building stocks have taken a hit as a result of this change in the housing market. Specifically, the SPDR Homebuilders ETF (XHB) has dropped 30% since December of 2021.

If you have reason to believe this news will impact your financial strategy or retirement plan, please contact Lane Hipple today!