Sales of new U.S. homes dropped unexpectedly in June to the lowest since April 2020, showing a further weakening in demand against a backdrop of elevated prices and tight supply.
The latest sales figures show an additional decline from previous months despite rising home prices that may be too high for some buyers as well as limited inventories available on the market due to lower construction rates during this economic slowdown period following recent financial crisis worldwide.
Construction prices are at an all-time high, causing the housing market to plummet and making homes unaffordable for most people. Construction costs have skyrocketed in recent months due to increased labor rates as well as rising transportation expenses that reflect higher oil prices. Lumber has also seen a dramatic increase in price because of sustained demand from China’s construction boom – but it may be lowered again soon if lumber producers follow through on their pledge not to raise any more timber tariffs or taxes until September 2020.
The surging cost of building materials is skyrocketing home values while simultaneously decreasing supply; this will lead us straight into another real estate bubble where houses become too expensive for anyone except wealthy citizens who can afford them out right off the bat.
The Biden administration recently met with homebuilding industry representatives to address the housing supply shortage and help ease pressures that spurred the surge in prices. The Commerce Department’s report showed median sales price for a new home rose 6.1% from last year, reaching $361,800.
In June, new home construction was at its highest rate in five years. While the number of homes sold with permits already issued declined to 289,000 from a month ago and 229,000 two months earlier (a measure of backlogs), more than ten times that many were either under construction or still waiting for approval – 353,000 altogether. The total amount available is 10% higher than it has been since 2008’s housing market crash started taking shape.
At the current sales pace, it would take 6.3 months to exhaust the supply of new homes, compared with 5.5 months in the prior month.
A separate report last week showed sales of previously-owned homes rose for the first time in five months in June as housing inventory improved slightly..
Sales are down in three of four U.S. regions, with purchases slumping about 28% in the Northeast and falling 7-9% everywhere else! New home sales account for only 10% of the market but are a timelier barometer than previously owned homes because contracts happen when they’re signed up instead of after closing agreements like other types–this is why we see 90 percent confidence that change ranges from 23 to 9%.