New home sales were at an adjusted annual rate of about 801,000 in January – a decrease of 4.5% compared with December and down 19.3% compared with January 2021, according to estimates from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
The median sales price of a new home sold in January was $423,300. That’s a 7% increase compared with December 2021 and a 13.4% increase compared with January 2021.
The average sales price in January was $496,900.
As of the end of the month, there were about 406,000 new homes available for sale in the U.S. – about a 6.1-month supply at the current sales rate.
The big problem, of course, is lack of inventory. With supply issues at play, builders are more challenged than ever to keep pace with demand.
“By stage of construction, the share of completed homes sold was 24.5 percent, which is down from 26.5 percent one year ago,” explains Odeta Kushi, deputy chief economist for First American, in a statement. “The share of homes under construction sold increased from 41.6 percent to 46 percent. Clear signals that builders continue to grapple with construction delays due to ongoing supply chain issues and higher material costs.”
“Similarly, the share of completed homes/ready to occupy inventory in January was approximately 9 percent, which is down from 13.2 percent a year ago, but up from last month,” Kushi says. “While the share of new home inventory that is not started increased from 24 percent to 26 percent, month over month.”
“Affordability remains a challenge, as rising new-home prices may be pricing out some buyers,” Kushi adds. “One year ago, 29 percent of new-home sales were priced below $300,000. In January of this year, only 9 percent of new-home sales were priced below $300,000.”
Supply-side headwinds continue to make it difficult for home builders to obtain certain materials and to hold costs down.
The lack of supply also “increases the time needed to build a home,” Kushi notes.
“Today’s new-home sales report is indicative of some of these challenges,” she says. “Builders are entering 2022 with backlogs that they are having a hard time completing due to material and labor shortages. And new home prices are sitting near a historic high. Demand for new homes remains strong as there is a lack of existing-home inventory, but rising new-home prices may be pricing out some buyers.”
Rising mortgage rates are also going to have an impact on affordability in the months to come, Kushi adds.
Photo: Todd Kent