Builders Still Worried Even as New Home Sales RiseJuly 25th, 2019 by Editor
According to recent data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, new single-family home sales increased 7% to a seasonally adjusted annual rate of 646,000 units in June. After the May decline, this year-to-date reading of June shows sales for 2019 are 2.2% higher than the same period last year.
However, the increase in sales is not a representation of the entire market outcome, experts say.
“The June figures are in line with our forecast predicting a modest 3.5 percent growth in new home sales for 2019, due largely to affordability concerns,” said Danushka Nanayakkara-Skillington, AVP for Forecasting and Analysis at NAHB.
The new home sale is classified as when a sales contract is signed and a deposit is accepted regardless of whether the home has not yet been started, is currently under construction or is completed. The June reading is the predicted number of units that would sell if the same pace continues for the next 12 months with seasonal effect adjustments.
The rise in demand has not changed the shortages builders are feeling in other areas.
“Though there is a clear demand for new homes, builders continue to wrestle with affordability headwinds, including shortages of buildable lots and skilled labor, that are constraining sales,” said Greg Ugalde, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Torrington, Conn.
The inventory of new homes for sale was 338,000 in June, representing a 6.3 months’ supply. The median sales price was $310,400, nearly identical to the $310,500 median price from a year earlier.
Regionally, and on a year-over-year basis, new home sales are higher in the West (19.4%) and South (9.5%) and down in the Northeast (50%) and Midwest (17.6%).