Surprise: New home sales beat expectations in September

Freedom and Responsibility

One of the biggest reasons people get into real estate is freedom. You get to be your own boss, set your own schedule, choose who you work with, and build the business you want.

But there's a catch. 

When you're your own boss, nobody is there to make sure you're actually doing the work. Nobody is telling you to make that follow-up call, prepare for tomorrow's listing appointment, or stop spending time on things that don't move your business forward.

That's the paradox of our business: The very freedom that makes it so appealing can also lead to your failure if you don’t know how to manage it.

So, in today’s Foundation Plans and Rise Above the Ranks, I want to talk to you about what being your own boss really looks like as an agent, and what I think you should focus on every day.  

Let's get into it.

- James

Sales of new homes beat expectations

In September, sales of newly built homes came in at an annualized rate of 676,000, according to Real Estate News. That’s down 0.6% from August and 5.3% from a year ago, when the rate was 714,000.

Still, it beat forecasters’ expectations by 23,000 sales, as price cuts, rate buydowns and smaller, more affordable homes kept buyers in the market despite higher mortgage rates this summer.

Here are the key points to know:

• More new homes are selling at lower prices. 51% of new homes sold for less than $400,000 in September, up from 46% a year earlier.

• New homes are cheaper than existing homes. The median new home price was $400,400, down 3.9% from a year ago and below the $417,500 median for existing homes. That marks the seventh straight month new homes have been the cheaper option.

• New home inventory remains steady. Supply stands at 8.4 months, down slightly from 8.5 months in August but a bit higher than a year ago, even as construction has slowed.

• The overall market is balanced. Combining new and existing homes, total supply sits at 5.2 months, within what the NAHB considers a balanced market. During the 2020–2021 boom, it fell to about three months.

• Builders have plenty of finished homes to move. About 111,000 completed new homes are for sale nationwide, keeping the new construction segment firmly in buyer’s market territory.

• Regional results varied sharply. Sales jumped 28% in the Northeast and 21.4% in the West from August, but fell 7.3% in the Midwest and 6.6% in the South. The Northeast was the only region with a year-over-year gain, up 10.3%.

My take

To be frank, I didn’t expect new home sales to beat forecasts this month, not with mortgage rates bouncing around the way they have. But that’s the thing about this market: no matter how dour the headlines get, you have to wait and see how it actually plays out, because buyers have a way of surprising you. Builders gave them reasons to act with price cuts, rate buydowns, and smaller homes, and 23,000 more sales than expected happened as a result. As I’ve said before, even when the market gets tough, transactions don’t go to zero. There’s always somebody out there looking to make a deal. Your job is finding those people and giving them compelling reasons to work with you. That's where your time and energy should be going.

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Nearly two-thirds of mortgages have a rate below 5%

65.6% of U.S. mortgages carry a rate below 5%, according to Realtor.com’s latest report on outstanding mortgages. With rates now hovering around 7.4%, many homeowners are reluctant to give up their low-rate loans, keeping inventory tight and buyers’ purchasing power squeezed. 

Still, the data shows the lock-in effect is gradually weakening because higher-rate loans make up a growing share of the market.

Here are the other main takeaways from the report:

• Low rates still dominate. 65.6% of mortgages are below 5% and 77.6% are below 6%, while only 22.5% carry a rate of 6% or higher.

• The 6%+ share is climbing. It rose 0.3 percentage points from Q1, the biggest quarterly move of any group, and is up 2.3 points from a year ago.

• Pandemic-era loans hit a record. Loans originated between July 2019 and June 2022 now make up 42.8% of all mortgages, while loans less than four years old have fallen to 27.8%, down from about 6 in 10 in 2023.

• Sub-3% rates were a one-time event. Rates fell below 3% only during the pandemic, the sole time since 1971, and that group has slipped from a peak of 24.6% to 19.2%.

• The 6%+ share could reach 27% to 28.5% by mid-2027. That would be the highest level in more than a decade, though 72% to 73% of mortgages would still sit below 6%.

• Sellers may be adjusting. Listing prices fell 1.4% in September and active listings edged higher, giving buyers a bit more room to negotiate.

My take

Here’s the thing about the lock-in effect: it was never going to break with a bang. It’s breaking with a slow leak. Every month, more homeowners face life events that matter more than their 3% mortgage rate, whether that’s a new baby, a new job, or a divorce. And when they move, some leave those low-rate mortgages behind. Gradually, the pool of low-rate loans shrinks while the share of mortgages carrying rates of 6% or higher grows. That group could account for more than a quarter of all mortgages by mid-2027. The real story, then, isn’t when rates will fall enough to unlock the market all at once. It’s that the market is resetting itself, one transaction at a time. For agents, the opportunity isn’t waiting for a rate miracle. It’s finding homeowners whose lives are already pushing them to move and helping them see how the numbers can work.

States with the highest and lowest property taxes

Property tax burdens vary across the country. According to the Tax Foundation's latest available data, effective property tax rates on owner-occupied homes range from just 0.29% in Hawaii to 1.88% in New Jersey and Illinois.

But a lower tax rate doesn't necessarily mean a smaller tax bill. Because property taxes are based on home values, homeowners in expensive markets can pay substantially more even when their effective rates are relatively low.

Consider Honolulu County, Hawaii, where the median annual property tax bill is $2,553. That's more than six times the $404 median bill in Buchanan County, Virginia, despite Virginia's statewide effective tax rate of 0.78%, compared with Hawaii's 0.29%.

With property taxes becoming an increasingly contentious cost of homeownership, voters in six states – Florida, Louisiana, North Carolina, Oklahoma, Tennessee, and Wyoming – will vote on property tax relief measures in next week's elections.

Based on the Tax Foundation's 2024 rankings, here are the five states with the lowest and highest effective property tax rates.

My take

Property taxes are one of those costs that buyers can easily underestimate when shopping for a home. And as these numbers show, looking at the tax rate alone doesn't tell you much about what you'll actually pay. A low rate on an expensive home can still produce a hefty bill. For agents, the lesson is simple: affordability isn't just about the purchase price and mortgage rate. It's about the total cost of ownership. Make sure your buyers understand that number before they make an offer, not after they receive their first property tax bill.

Schematics

The news that just missed the cut

• Do this to grow your agent business by an extra 100K

• 20 bad real estate photos and how to avoid making these mistakes 

• Millionaire NYC renters are growing faster than homeowners

• Things that scare away sellers at the listing appointment

• Ranked: The best and worst cities for retirement in the U.S.

Foundation Plans

Advice from James to win the day

With lots of freedom comes lots of responsibility. 

As an agent, it’s easy to spend an entire day answering emails, responding to texts, going to showings, and checking listings, only to realize you haven't done much to grow your business. The most successful agents aren't necessarily the busiest. They're the ones who know where to put their time and energy.

In the latest Rise Above the Ranks, I break down what I think every agent should prioritize.

Here's what I cover:

• Setting daily priorities: The one question to ask yourself before you start reacting to everything in your inbox.

• The power of follow-up: Why your next deal might already be sitting in your phone or CRM.

• Preparing for listing appointments: How to go beyond presenting comps and become a trusted advisor.

• Maintaining client relationships: Why closing a deal should never mean ending the relationship.

• Making sense of the market: How to use market knowledge to help clients make better decisions.

The bottom line? You don't need to do 50 things every day. You need to do the few things that matter, and do them consistently.

Watch the full episode here, and then drop me a line after you do. I’d love to hear what you think.

Breezy

Feature of the Week — Efficiency

Breezy runs alongside real estate agents throughout the day and acts as an AI personal assistant in real time.

At a high level, Breezy does these things:

• Captures and organizes conversations so no follow-up or detail gets lost

• Generates branded comps and reports on the fly, ready for clients

• Keeps your pipeline current automatically, without manual updating

• Reveals how you can reposition and develop your property through proprietary software we call Underbuilt

Instead of agents juggling spreadsheets, notes apps, CRM updates, and presentation tools, Breezy brings those workflows together.

Try Breezy free for 30 days with code BLUEPRINT30.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

“Your time is limited, so don’t waste it living someone else’s life.” — Steve Jobs

Each day is a gift – a chance to live the life you want. Ruthlessly focus on your goals. Don’t let your past or the fear of being judged distract or paralyze you. Choose to live with an integrity that you can be proud of.

Have a wonderful weekend, and I’ll see you back here next Friday!

- James