New-home sales tapered off at the end of 2020 as higher home prices offset some of the strong buyer demand seen earlier in the year. While sales of newly built single-family homes increased 1.6% in December, sales had been much stronger over recent months.
New-home sales in 2020 posted an 18.8% increase over 2019, the U.S. Department of Housing and Urban Development and U.S. Census Bureau reported Thursday.
“While the market remains solid, median home prices are increasing due to higher building material costs, most notably softwood lumber, and a shift to larger homes,” says Robert Dietz, chief economist of the National Association of Home Builders.
The median sales price was $355,900 in December. In December 2019, the median new home sales price was $329,500.
“Looking forward, builders are concerned that increased regulatory burdens in 2021 could hurt housing affordability,” says Chuck Fowke, chairman of the NAHB.
The inventory of new homes remains low at a 4.3-month supply, nearly 19% lower than a year ago.
Across the country, new-home sales saw the largest gains for all of 2020 in the Midwest—up 24.2%—followed by a 21.2% gain in the Northeast, an 18.9% increase in the West, and a 17.6% increase in the South.