The brand new-homes market is recovering—with gross sales on the rise—however hurdles together with a lumber scarcity are nonetheless hampering builders.
New listings of newly-built properties dropped 4.1% yr over yr to a seasonally-adjusted fee of 74,000 in August, reversing course after a 3.8% acquire in July. In the meantime, new listings of present properties grew 5.2%.
“There’s loads of demand for brand new properties, however builders are dealing with a novel and dear set of hurdles as they try and fulfill that demand,” stated Redfin chief economist Daryl Fairweather. “Listings of recent properties aren’t bouncing again as rapidly as listings of present properties as a result of, not like particular person householders, building corporations must cope with lumber and labor shortages in the course of the pandemic. They’re additionally competing for labor and supplies with of us who’re renovating their homes throughout quarantine. The shortage of recent listings is protecting builders from reaching their full potential when it comes to home-sales progress.”
Gross sales of newly-built properties have been up 8.3% yr over yr to 73,000, a deceleration from July’s 13.5% enhance, whereas gross sales of present properties rose 10.5%—outpacing new-home gross sales progress for the primary time since 2015.
The availability of newly-built properties on the market sank 33.6% yr over yr in August to 185,000, whereas the variety of present properties in the marketplace plunged 38.3%—the biggest declines since no less than 2013.
The acute dearth of properties on the market, paired with robust homebuyer demand resulting from record-low mortgage charges, is driving up costs. Newly-built properties offered for a median of $378,000 in August. That’s 4.1% increased than a yr earlier, exceeding the pre-coronavirus (February) progress fee for the primary time. In the meantime, present dwelling costs rose 12.1% to a median of $316,000. Present properties are sometimes extra reasonably priced, and consequently extra fascinating for a lot of Individuals, explaining the comparatively excessive value progress.
“Costs will preserve going up if we don’t see a significant enhance within the provide of recent properties in the marketplace,” Fairweather stated. “Sadly, there are not any indicators that such a rise will happen anytime quickly.”
Homebuilding exercise slumped in August, the U.S. authorities reported final week. The variety of housing begins dropped 5.1% from the prior month, whereas housing completions slipped 7.5% and constructing permits fell almost a %—intensifying the present housing shortage.
Homebuilders appear to be optimistic concerning the future; builder confidence rose to an all-time excessive this month as record-low rates of interest and a shift to the suburbs in the course of the pandemic fueled homebuyer demand, based on the Nationwide Affiliation of House Builders. Nonetheless, the NAHB flagged a number of issues, noting that lumber costs have skyrocketed greater than 170% since mid-April, including greater than $16,000 to the worth of a typical new single-family dwelling.
“Historic visitors numbers have builders seeing constructive market circumstances, however many within the business are nervous about rising prices and delays for constructing supplies, particularly lumber,” stated NAHB Chairman Chuck Fowke. “Extra home lumber manufacturing or tariff reduction is required to keep away from a slowdown available in the market within the coming months.”
Extra New-Development Highlights in August:
- The everyday new dwelling was in the marketplace for 88 days earlier than going underneath contract, down from 93 days a yr earlier. The everyday present dwelling spent 29 days in the marketplace, down from 38 days in August 2019.
- Newly-built properties made up 19% of all homes on the market.
- The West was a laggard, with larger declines in new-construction listings and stock than every other U.S. area, in addition to decrease progress in new-home gross sales than the Midwest, Northeast or South. The Northeast fared comparatively nicely, as the one area experiencing progress in new-construction listings. It additionally noticed a larger acquire within the median sale value of recent properties than every other area.
NOTE: The info on this report could not seize all new listings and gross sales of new-construction properties, as extra homebuyers have not too long ago been buying properties earlier than they’re constructed, which means these properties by no means go in the marketplace.