Marred by continuing inventory shortages, sales of newly-built U.S. homes in June fell to nearly 20 percent below last year’s pace.
The findings, part of a July U.S. Census Bureau and U.S. Department of Housing and Urban Development monthly report , revealed that sales of single-family homes were at a seasonally adjusted annual rate of 676,000, 6.6 percent below the revised May rate of 724,000 and 19.4 percent below the June 2020 estimate of 839,000.
However, that trend was not seen in the Midwest, where home sales were up approximately 5.7 percent from the previous month. Compared to June 2020, home sales are up 7 percent across the region.
June sales paces in other regions were far lower than the previous year:
The national median sales price of new houses sold last month was $361,800, and the average sales price was $428,700. The seasonally adjusted estimate of new houses for sale at the end of last month was 353,000, representing a supply of 6.3 months at the current sales rate.
Even with the growth in the Midwest, Wisconsin Bankers Association President/CEO Rose Oswald Poels said homes are frequently selling within 24 hours of listing, often above listing price. She does not see that trend changing in the coming months and instead expects the housing market to return to normal inventory and construction levels within 12-18 months. She said one unknown factor in that outlook is how many employers allow employees to work remotely and the housing impact of those decisions.
Ron Haynie, Independent Community Bankers of America senior vice president of mortgage finance policy, said summer usually brings a drop in home sales as people who bought homes earlier in the year settle into their new spaces. Those numbers tend to increase again in the fall, when people seek to move before the holiday season. Another trend Haynie sees is a lack of inventory, especially in regions like the Northeast, where there is a lack of development space. Haynie said more rural parts of the Midwest have more room for growth.
The housing shortage is also evident in rising home prices. According to the American Banking Association, U.S. home prices increased nearly 10.5 percent last year, an eight-year high. As fierce competition among homebuyers continues, homes often sell above listed price, depleting existing home inventories to near-record lows.
While new housing starts are increasing, shortage of skilled labor, supply chain bottlenecks and material shortages drastically increased the costs of construction and dampened building activity. Lumber prices reached record highs this spring. Tight inventories and continued supply-chain constraints are expected to maintain upward pressure on home prices into 2023.