uilders are feeling bullish. They’re quick to brush off the modest 0.4% dip in sales of newly built single-family homes on a monthly basis in December. Instead, they’re focusing on how sales are still 23% higher than a year ago.
“High levels of home builder confidence, coupled with an insufficient existing housing supply to meet current demand, suggest growth ahead for new home sales this year,” says Dean Mon, chairman of the National Association of Home Builders.
Lower mortgage rates helped to accelerate new-home sales during the second half of the year, making it the best year for new-home sales since the recession, adds NAHB Chief Economist Robert Dietz.
The housing industry has long called on home builders to boost construction to meet increasing buyer demand and help cities respond to housing shortages. Inventory of homes for sale nationwide has plunged to the lowest level in 20 years, according to a recent report from the National Association of REALTORS®. NAR’s data shows that, at the end of December, there was a three-month supply of homes on the market, the lowest in NAR records spanning two decades.
Inventory levels of new-home sales are showing signs of improvement. Inventory now stands at a 5.7-month supply and 327,000 new single-family homes are for sale. Just 78,000 of that total are completed and ready to occupy.
“Extremely tight supply conditions continue to hold sales down and are driving more home buyers to the new-home market,” Ben Ayers, Nationwide’s senior economist, and economist Daniel Vielhaber wrote in a research note.
The median sales price was $331,400 in December, the U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported Monday. Sales prices are up compared to a year ago when it was $329,700.
On an annual basis, new-home sales are up the most in the West—31% higher than a year ago, followed by the Midwest, up 10.1%. Sales are down by 15.4% in the South and by 11.8% in the Northeast.