The National Association of Home Builders says buyers are increasingly looking at new homes due to the low inventory of existing homes.
In October, new home sales were up 41.5% compared to the same month last year, according to data from the Commerce Department.
“Buyer traffic remained strong in October even as the country’s attention was focused on the elections and policy issues going into 2021,” said NAHB Chairman Chuck Fowke. “Mortgage rates remain low and builder confidence is at an all-time high indicating that demand remains steady and sales will remain solid.”
Sales of new built single-family homes were down 0.3% in October compared to September, but even with that slight decline, the overall new home market is massively elevated this year.
The NAHB’s data shows that “the gap between construction and sales was at an all-time high in early fall”, ssaid NAHB chief economist Robert Dietz. “Thus, the NAHB forecast contains an acceleration in single-family starts and some slowing of the pace of growth for new homes sales to allow a catch up. Demand remains strong as home buyers seek out lower density markets as part of the suburban shift.”
The median sales price for new homes in October was $330,600, compared with $322,400 in the same month one year before.
New home inventory remains tight with a 3.3-month supply at the current sales pace. Despite high buyer demand, inventories of new single-family homes is down 13.4% from last year. Homebuilders point to ongoing labor and lot shortages and rising lumber prices as reasons new-home construction has slowed.
New-home sales are hottest in the Northeast and Midwest, where, on a year-to-date basis, sales are up 29.9% and 29.8%, respectively. New-home sales on a year-to-date basis are also up by 20.1% in the West and by 18.5% in the South.