New home sales posted a solid gain last month, driven by strong buyer demand, low existing home inventory and buyers' anticipation of future higher mortgage rates. Sales of newly built, single-family homes in November rose 12.4% to a 744,000 seasonally adjusted annual rate from a downwardly revised reading in October, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. New home sales were down 14% compared to a year ago.
“Our members are seeing strong buyer traffic as continued low mortgage rates are helping fuel sales," said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and custom home builder from Tampa, Fla. “However, builders are still grappling with major supply chain issues and soaring materials costs, which are causing construction delays.”
“Despite the increase in sales, housing affordability remains a major concern,” said Danushka Nanyakkara-Skillington, NAHB Assistant Vice President of Forecasting and Analysis. “With building material pricing, the challenge for builders in 2022 will be to deal with higher input costs while making sure home prices remain within reach for American home buyers.”
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 November reading of 744,000 units is the number of homes that would sell if this pace continued for the next 12 months.
Inventory remains steady at a 6.5-months' supply, with 402,000 new single-family homes for sale, compared to 290,000 in November 2020.
The median sales price continued to rise to $416,900 from the $408,700 median sales price posted in October, and rose 18.8% on a year-over-year basis, due to higher development costs, including materials.
Regionally, on a year-to-date basis, new home sales fell in all four regions, down 1.3% in the Northeast, 5.3% in the Midwest, 4.5 % in the South and 12.5% in the West.