New Home Sales Hold Steady in December
Higher home prices stemming from rising lumber and other building material costs, as well as a lack of inventory due to a shortage of buildable lots, offset solid demand for new home sales in December. Despite a brief slowing in sales activity toward the end of the year, new home sales in 2020 posted an 18.8 percent gain over 2019.
Sales of newly built, single-family homes in December rose 1.6 percent to an 842,000 seasonally adjusted annual rate, from a downwardly revised November reading, according to data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
"Sales growth continues in lower cost, lower density markets," says Chuck Fowke, chairman of the National Association of Home Builders. "Indeed, the Midwest posted a 24 percent sales gain in 2020. Looking forward, builders are concerned that increased regulatory burdens in 2021 could hurt housing affordability."
"While the market remains solid, median home prices are increasing due to higher building material costs, most notably softwood lumber, and a shift to larger homes," says Robert Dietz, NAHB chief economist.
Inventory remains low at a 4.3 months' supply, with 302,000 new single-family homes for sale, 18.9 percent lower than December 2019.