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New Home Sales Fall as Home Prices Jump

Rising building materials costs and low inventory have caused new home sales prices to jump 20 percent on a year-over-year basis. Sales of newly built, single-family homes fell 5.9 percent following a significant downward revision of the March estimate, to an 863,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau

"Affordability factors are clearly affecting new home sales," says Chuck Fowke, chairman of the National Association of Home Builders. "A growing number of builders are limiting sales in order to manage supply chains, including access and cost factors associated with lumber, appliances and other building materials. Policymakers need to find ways to improve the supply-chain, by facilitating more domestic production, or in cases where that cannot be done, suspending tariffs to allow for more imports."

"After a period of builders holding back price increases, new home prices were 20 percent higher year-over-year per the April Census data," says Robert Dietz, NAHB chief economist. "Higher costs have priced out buyers, particularly at the lower end of the market. A year ago, 45 percent of new home sales were priced below $300,000. In April 2021, only 27 percent of new home sales were priced below $300,000."
Inventory remains low at a 4.4 month supply, 33.3 percent lower than April 2020. Completed homes continue to fall as a share of the market, representing only about 11 percent of the inventory in April, compared to 24 percent a year ago. The median sales price was $372,400, up from the $310,100 median sales price posted a year earlier.