June's New Home Sales Fall to Lowest Rate This Year

June’s annual sales rate is the lowest since April 2020, yet despite the recent cooling trend new home sales are up 13.5% on a year-to-date basis when compared to the same period one year ago.

“The June data came in lower than expected, and we anticipate an upward revision next month,” said Robert Dietz, the National Association of Home Builders’ chief economist. “Nonetheless, sales have trended lower as construction costs have increased and builders have sought to manage material delays and cost challenges in the construction pipeline, in addition to dealing with shortages of lots and labor in many housing markets.”

The median sales price of new houses sold in June 2021 was $361,800, up 6.1% from a year ago. The average sales price in June was $428,700. 

The inventory of new houses for sale at the end of June was an estimated 353,000 – a 6.3-month supply at the current sales rate. New single-family homes for sale were 46.5% higher than June 2020, but the inventory of homes available for sale but not yet under construction was up 84% year-over-year, a clear sign of supply-side limitations in the building market, according to the NAHB. In contrast, completed, ready-to-occupy inventory was down 44% year-over-year, to just 36,000 homes.

“Sales continued to trend lower in June as some builders slowed sales contracts to manage supply chains amidst longer delivery times and higher construction costs,” said Chuck Fowke, NAHB chairman. “While lumber prices have shown some improvement in spot markets, these declines take time to translate into lower construction costs. Moreover, other items like OSB remain elevated.”

Regionally, on a year-to-date basis, new home sales rose in all four regions, up 19.5% in the Northeast, 23.9% in the Midwest, 15.6% in the South and 4.1% in the West. These significant increases are due in part to lower sales volumes during the coronavirus health crisis a year ago.

By David Schollaert, David@SteelMarketUpdate.com