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Supply-Chain Challenges Remain
According to data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes fell 6.6 percent in June to a 676,000 seasonally adjusted annual rate. The June number follows downward revisions to the May estimate and marks the lowest rate since April 2020. Despite the recent cooling trend, new home sales are up 13.5 percent on a year-to-date basis.
“Sales continued to trend lower in June as some builders slow sales contracts to manage supply-chains, amidst longer delivery times and higher construction costs,” said Chuck Fowke, chairman of the National Association of Home Builders. “While lumber prices have shown some improvement in spot markets, these declines take time to translate into lower construction costs. Moreover, other items like OSB remain elevated.”
“The June data came in lower than expected, and we anticipate an upward revision next month,” said NAHB Chief Economist Robert Dietz. “Nonetheless, sales have trended lower as construction costs have increased and builders have sought to manage material delays and cost challenges in the construction pipeline, in addition to dealing with shortages of lots and labor in many housing markets.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 676,000 units is the number of homes that would sell if this pace continued for the next 12 months.
Inventory ticked up slightly, but remains low at a 6.3-month supply, with 353,000 new single-family homes for sale, 46.5 percent higher than June 2020. Inventory of homes available for sale, but not begun construction was up 84 percent year-over-year, a clear sign of supply-side limitations in the building market. In contrast, completed, ready-to-occupy inventory is down 44 percent year-over-year, to just 36,000 homes.
The median sales price was $361,800, up 6 percent from the $341,100 median sales price posted a year earlier.
Regionally, on a year-to-date basis, new home sales rose in all four regions, up 19.5 percent in the Northeast, 23.9 percent in the Midwest, 15.6 percent in the South, and 4.1 percent in the West. These significant increases are due in part to lower sales volume during the Covid crisis a year ago.
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