New-Home Sales Slow Slightly
October 27, 2020
The new-home market continues to be a bright spot in real estate, but sales scaled back slightly in September, the Commerce Department’s latest data shows. Sales of newly built single-family homes dropped 3.5% in September to a pace of 959,000. However, sales of new homes are 32.1% higher than they were a year ago as builders try to play catch-up.
“The demand for new single-family homes remains strong as interest rates are at historic lows,” says Chuck Fowke, chairman of the National Association of Home Builders. “However, the recent run-up in lumber and other material costs is leading to an increase in pricing.”
Rises in lumber costs have added an average of $16,000 to the price of a newly built single-family home since April, according to the NAHB.
The median sales price for a new home was $326,800 in September. A year earlier, the median for a new-home sale was $315,700.
“The pace of new-home sales growth over the summer was going to slow given that the gap between sales and single-family construction reached an all-time high in August,” says Robert Dietz, the NAHB’s chief economist. “Indeed, September sales of new homes that had not started construction were up 47% compared to a year ago.”
Inventory is at a 3.6-month supply, with 32% fewer single-family homes for sale than a year ago, according to the Commerce Department.
Across the country, new-home sales in September were highest on a year-to-date basis in the Midwest (up 25.9%), followed by a 22.5% increase in the Northeast, an 18.0% gain in the West, and a 14.4% uptick in the South.
Updated: November 30, 2020