Sales of newly built single-family homes continued to decline in June as some builders slowed sales contracts to manage supply-chain challenges and more potential buyers became priced out. Homebuilding timelines are stretching longer and higher construction costs are frustrating buyers.
Sales of new single-family homes fell to the lowest level since the first month of the outbreak of the COVID-19 pandemic in the U.S. in early June. Sales dropped 6.6% in June compared to May, the Commerce Department reported on Monday. Single-family home sales are now 19.4% below June 2020 levels.
But sales recently have been trending lower as construction costs increase. Homebuilding costs for a variety of building materials, including lumber, remain high. “While lumber prices have shown some improvement in spot markets, these declines take time to translate into lower construction costs,” said Chuck Fowke, chairman of the National Association of Home Builders. “Moreover, other items like [oriented strand board] remain elevated.” Read more: Plummeting Lumber Prices Little Help to Builders and Prices for Construction Materials Jump 26% in a Year
The median sales price for a new home was $361,800 in June, up 6% compared to a year earlier. Inventories of new homes rose slightly in June, but remain low at a 6.3-month supply.
However, inventories are significantly higher than a year ago—up nearly 47% compared to June 2020. Homes available for sale that have not yet begun construction climbed 84% year over year. That is “a clear sign of supply-side limitations in the building market,” the NAHB said.