Aug 26, 2023 - Real Estate

Tampa: High mortgage rates lead to new-build boom

Illustration of construction workers analyzing a house on top of a stack of money.

Illustration: Trent Joaquin/Axios

Tampa Bay builders are enticing buyers with creative financing plans as U.S. mortgage rates hit a 20-year high.

Why it matters: Golden handcuffs are locking up Florida's housing inventory, and that's part of the reason there's an increased interest in new builds, according to real estate experts.

The big picture: Sales of existing U.S. homes — the great majority of houses sold nationally — slid 19% from last year, while new home sales soared 24%, according to June figures.

In theory, an interested buyer in Tampa Bay could look at two nearly identical houses — one about a year old and the other brand new — and get a better deal on the new house, says Jay Quigley, Greater Tampa Realtors president.

  • Details: Even though the average 30-year fixed rate mortgage is more than 7%, many builders have relationships with lenders that allow them to "buy down the points" and offer a mortgage closer to 6%, Quigley tells Axios.

What they're saying: "We sold our Odessa home for a tidy profit in early 2021 just before the Fed started to raise interest rates," says Axios Tampa Bay reader Gregory Hipps.

  • Hipps — now renting in Harbour Island — said he hoped home costs would come down, and planned to buy this year. That didn't happen.
  • "If we don't start to see any deals in the next few months, we're talking about exploring other markets like Nashville or Austin," he told Axios.

Between the lines: The number of listings coming onto the Tampa metro market is down nearly 29% compared to June 2022, per Redfin.

State of play: The new-build boost comes after rising rates curbed pandemic-driven home buying demand.

  • Builder confidence is now at its highest level since June 2022, having declined every month that year, according to the National Association of Home Builders.

What we're watching: Some builders are offering smaller, more affordable houses to lure first-time buyers, Axios' Matt Phillips reports.

  • And Tampa Bay has seen an increased interest in multi-family units, Quigley says.
Data: U.S. Census Bureau; Chart: Axios Visuals

The number of new homes sold in the South rose 21.4% in June compared to a year earlier, per the U.S. Census Bureau.

What's happening: New homes comprised nearly a third of total inventory in May, exceeding their typical 10%-to-15% share, according to chief economist Robert Dietz at the National Association of Home Builders.

Go deeper: Old houses now cost as much as new houses

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