New home sales in January were at a seasonally adjusted annual rate of 923,000, an increase of 4.3% compared with December and up 19.3% compared with January 2020, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Regionally, new home sales increased 12.6% in the Midwest, 6.8% in the West, and 3% in the South. However, new home sales decreased 13.9% in the Northeast.
The median sales price for a new home sold in January was $346,400. The average sales price was $408,800.
As of the end of the month there were about 307,000 new homes available for sale, about a four-month supply at the current sales rate.
“Historically low mortgage rates and solid demand spurred an increase in new home sales in January, with the sales pace more than 19 percent higher than a year ago,” says Chuck Fowke, chairman of the National Association of Home Builders (NAHB), in a statement. “However, rising affordability issues are looming this year, particularly increasing building material costs, including lumber, which is adding $24,000 to the price of a typical newly-built home. Builders also cite rising regulatory issues as a potential concern.”
“With existing home inventory at all-time lows, the demand for new construction remains strong,” adds Robert Dietz, chief economist for NAHB. “Though, rising building and development costs, combined with recent increases in mortgage interest rates, threaten to exacerbate existing affordability conditions. Builders are exercising discipline to ensure home prices do not outpace buyer budgets.”
Gregg Logan, managing director, RCLCO Real Estate Advisors, thinks “this will be another strong year for the new housing market” but adds that he is “concerned about how low inventories and rising prices will impact consumer’s ability to purchase, both from an availability and affordability perspective.”
“Builders at the top selling master planned communities are quickly running through their lot allocations, lumber prices are high, and appliances are sometimes hard to obtain quickly, and all of this is stretching out the home purchasing process,” Logan says in a statement. “In short, demand is strong, but will the industry be able to meet the demand?”
Photo: Todd Kent