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New-home buyers are facing even steeper prices. The median sales price of a newly built single-family home rose to $423,300 in January, up more than 13% from a year ago, according to data from the National Association of Home Builders. Higher development costs and rising prices for construction materials are to blame, builders say. “New-home prices continue to rise as the cost of materials increases,” says NAHB Chief Economist Robert Dietz. “Higher mortgage rates will slow homebuying demand over the course of 2022, and the Russia-Ukraine crisis will add short-term volatility to the bond market.”
Sales of newly built single-family homes decreased 4.5% month over month in January, the Census Bureau and Department of Housing and Urban Development reported Thursday. However, buyer demand remains high while inventory is limited, builders say. “Builders are grappling with supply-chain issues that are extending construction times and increasing costs,” says NAHB Chairman Jerry Konter. “Policymaking needs to focus on alleviating production bottlenecks, particularly as it relates to lumber and other building materials.”
Despite the challenges, new-home sales are up 34.4% over a year ago. But builders say material and pricing bottlenecks are preventing them from ramping up production.
Regionally, new-home sales posted drops in three out of the four major regions of the U.S. last month, led by a 10.7% decrease in the Northeast, a 7.4% drop in the South, and a 3.7% decline in the Midwest. The West was the only region of the U.S. to post an increase last month, with new-home sales rising 1.2%.