Washington, D.C.—Rising building material costs and low inventory have caused new home sales prices to jump 20% on a year-over-year basis, harming housing affordability and driving down new home sales, according to a report by the National Association of Home Builders (NAHB).
Sales of newly built, single-family homes fell 5.9% following a significant downward revision of the March estimate to a seasonally adjusted annual rate of 863,000, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“Affordability factors are clearly affecting new home sales,” said Chuck Fowke, NAHB chairman. “A growing number of builders are limiting sales in order to manage supply chains, including access and cost factors associated with lumber, appliances and other building materials. Policymakers need to find ways to improve the supply chain, by facilitating more domestic production, or in cases where that cannot be done, suspending tariffs to allow for more imports.”
Robert Dietz, NAHB chairman, added, “After a period of builders holding back price increases, new home prices were 20% higher year-over-year per the April Census data. Higher prices have priced out buyers, particularly at the lower end of the market. A year ago, 45% of new home sales were priced below $300,000. In April 2021, only 27% of new home sales were priced below $300,000.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the April reading of 863,000 units is the number of homes that would sell if this pace continued for the next 12 months.
Inventory remains low at a 4.4 month supply, with 316,000 new single-family homes for sale, 33.3% lower than last year in April. Completed homes continue to fall as a share of the market, representing only about 11% of the inventory in April, compared to 24% a year ago.
The median sales price was $372,400, up from the $310,100 median sales price posted a year earlier.