Despite affordability and supply challenges, sales continue to exceed pre-Great Recession levels
Sales of newly-built homes have hit their highest level since 2006, according to data from the US Department of Housing and Urban Development and the US Census Bureau.
New home sales rose at a seasonally adjusted annual pace of 901,000 units in July, up 13.9% from the previous month and up 36.3% from the same period a year ago. New home sales climbed 8% year over year.
"This is exactly what NAHB's builder confidence survey has been indicating in recent months. Consumers are being driven by low interest rates, a growing focus on the importance of housing and a shift in buyers seeking homes in lower-density areas," said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). "Despite these positive conditions, affordability challenges remain, especially as builders are dealing with building cost increases, including a dramatic rise in lumber costs in recent months."
Meanwhile, the supply of new single-family homes for sale fell to a four months' supply of 299,000 homes, 8.8% lower than July 2019 and the lowest since 2013. Of the inventory total, only 61,000 are completed and ready to occupy. However, the median sales price jumped from $308,300 to $330,600 year over year.
New home sales are benefitting from the suburban shift, as prospective buyers look for affordable markets to get more residential space, according to NAHB Chief Economist Robert Dietz.
Regionally, sales in all four regions were up on a year-to-date basis: 21.7% in the Northeast, 20.4% in the Midwest, 4.8% in the South, and 8.7% in the West.
"Moreover, sales are increasingly coming from homes that have not started construction, with that count up 34% year-over-year," Dietz said. "In contrast, sales of completed, ready-to-occupy homes are down almost 24%. These measures point to continued gains for single-family construction ahead."