Steel Markets

New Home Sales Slide to Lowest Pace in a Year

June 23, 2021

Sales of new single-family homes in May slipped 5.9% from April’s downward revised estimate to a seasonally adjusted annual rate of 769,000, the Commerce Department reported on Wednesday. Sales were 9.2% higher than in May 2020. Sales declined in four of the last five months, falling from the 12-month peak of 993,000 homes sold in January 2021.

Median sales price jumped 18% from a year ago to $374,400 and the average sale price rose to $430,600.

“As expected, new home sales have continued to soften this spring, while higher prices have shifted some buyers to the sidelines,” said Robert Dietz, chief economist at the National Association of Home Builders.

Inventory of new houses for sale at the end of May was estimated at 330,000—a 5.1-month supply at the current sales rate.

“Supply-side challenges remain an issue, with the count of new homes sold that had not started construction up 76% over the last year,” said Dietz. “The count of new homes sold that are completed and ready to occupy is down 33%.”

Higher material costs and delivery delays caused new home prices to increase in the past year, said NAHB Chairman Chuck Fowke. “Policymakers must take action to improve supply-chains in order to protect housing affordability. While lumber costs have come down in recent weeks, they are still more than 210% higher than a year ago. And OSB prices are up 380% over the last year.”

On a month-over-month basis, sales were flat in the Midwest and down 14.5% in the South. Sales rose 33.3% in the Northeast and 6.7% in the West. Compared to a year ago, sales were higher in all four regions.