Sales of newly-constructed single family homes declined 5.9% during May to a seasonally adjusted annual rate of 769,000 – the lowest in a year, according to estimates from the Census Bureau. Analysts say builders slowed sales due to higher material costs and declining availability of labor, material and lots.
Despite fewer sales, prices are escalating.
The median price of a newly-built home that sold in May was $374,400. That is 18% higher than a year ago, according to the National Association of Home Builders. Rising lumber costs alone added an estimated $36,000 on average, to the cost of a new home.
Robert Dietz, chief economist and senior vice president for economics and housing policy for NAHB, said residential demand continues to be supported by low interest rates, a renewed consumer focus on the importance of housing, and solid demand in lower-density markets like suburbs and exurbs.
General unpredictability in the residential construction supply-chain is having measurable impacts on new home prices, according to NAHB.
Higher costs are pricing out buyers, particularly at the lower end of the market. While 44% of new home sales were priced below $300,000 a year ago, only 26% of May 2021 sales were under that threshold.