June 2020 saw a small decline in single-family new home sales to around 6.6% according to the National Association of Home Builders Eye on the Economy. The annualized rate fell to 676,000. Although the past several months have seen a small monthly decline, the new home sale is still 13.5% higher on a year-to-year basis from 2020.
The small decline according to some industry professionals is from the lack of inventory and the higher construction costs while other industry leaders believe it is caused due to the higher new home prices. New home prices have risen 10% since January 2020.
The new home inventory is down by 44% which is a little over 34,000 homes over the last year. Supply factors including the material, labor and lots are holding builders back. The survey also indicated that today’s buyers are not happy with housing affordability. In fact, the share of buyers who can afford less than half the homes available for sale worsened from 63% at the end of 2020 to 71% by midyear.
Although the market is still going strong, those who did not purchase during the second quarter of 2021 was due to pricing. The higher construction cost and development costs have hindered housing prices. The GDP growth for the second quarter was at a low of 6.5%. The good news is that NAHB is predicting an overall growth rate of just under 7% for the whole year. This will be the best rate seen since 1984.
This is still a good time to buy as mortgage rates are still reasonable. If you are in the market for a home, contact your local Realtor.