According to a report from the National Association of Home Builders (NAHB), Washington, D.C., higher interest rates, supply shortages and rising material prices, particularly for lumber, put a damper on new home sales in February.
The report noted that, according to released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built single-family homes fell 18.2% in February to a seasonally adjusted annual rate of 775,000 sales. This is the lowest level since May 2020. (A new home sale occurs when the parties sign a sales contract, or the seller accepts a deposit. The home can be in any stage of construction: construction not started, under construction or completed.)
In addition to adjusting for seasonal effects, the February reading of 775,000 units is the number of homes that would sell if this pace continued for the next 12 months.
“Inventory rose slightly to a 4.8 months’ supply, with 312,000 new single-family homes for sale, 12.7% lower than February 2020,” stated the report. “Homes available for sale that have not started construction are up 67% over last year, an indicator of increasing delays and higher costs associated with construction.”
“Though buyer traffic remains strong, some home building activity is being delayed due to material shortages,” said Chuck Fowke, NAHB chairman. “This is forcing builders and buyers to grapple with rising affordability issues, as soaring lumber prices have added more than $24,000 to the price of a new home.”
Regionally on a year-to-date basis, new home sales declined 9.3% in the West, and rose in the other three regions, up 6% in the Northeast, 24.7% in the Midwest and 23.2% in the South.