Buyers continue to rush to the new-home market. Sales of newly built single-family homes in July surged to the highest pace since 2006, jumping 36% higher than a year ago, the U.S. Department of Housing and Urban Development and U.S. Census Bureau reported Tuesday.
The Midwest saw the largest spike in new-home sales last month, a 59% month-over-month increase in July. All four major regions of the U.S. posted annual gains in new home sales.
“Consumers are being driven by low interest rates, a growing focus on the importance of housing, and a shift in buyers seeking homes in lower density areas,” says Chuck Fowke, chairman of the National Association of Home Builders. “Despite these positive conditions, affordability challenges remain, especially as builders are dealing with building cost increases, including a dramatic rise in lumber costs in recent months.”
The NAHB reported a recent spike in softwood lumber prices that has added an average of $14,116 to the cost of a new single-family home since April 17.
The median sales price for a new home in July was $330,600, up 7% from a year ago.
“New-home sales are benefiting from a suburban shift, as prospective buyers seek out affordable markets in order to obtain more residential space,” NAHB Chief Economist Robert Dietz says. “Moreover, sales are increasingly coming from homes that have not started construction, with that count up 34% year over year. In contrast, sales of completed, ready-to-occupy homes are down almost 24%. These measures point to continued gains for single-family construction ahead.”
Year over year, the Northeast posted a 21.7% annual increase in new-home sales in July, followed by a 20.4% yearly gain in the Midwest, an 8.7% increase in the Midwest, and a 4.8% uptick in the South.
Still, builders are keeping their inventories low. New-home inventory dropped to a four-month supply in July, the lowest since 2013. A six-month supply is considered a benchmark indicating a balanced market.