New-home sales dropped 4.5% in Jan., but builders say demand remains strong. They blame supply-chain issues that increase costs and slow construction time.
WASHINGTON – January’s new-home sales declined in the face of rising interest rates and supply-chain problems within the building industry, but demand remains strong, according to the National Association of Home Builders (NAHB).
Sales of newly built, single-family homes in January fell 4.5% to an 801,000 seasonally adjusted annual rate compared to an upwardly revised reading in December, according to the U.S. Department of Housing and Urban Development and U.S. Census Bureau.
“Demand is strong given a lack of existing home inventory,” says Jerry Konter, NAHB chairman. “Builders are grappling with supply-chain issues that are extending construction times and increasing costs.”
“New home prices continue to rise as the cost of materials increases,” adds NAHB Chief Economist Robert Dietz. “Higher mortgage rates will slow home buying demand over the course of 2022, and the Russia-Ukraine crisis will add short-term volatility to the bond market.”
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 January reading of 801,000 units is the number of homes that would sell if the current pace continued for the next 12 months.
New single-family home inventory was up 34.4% year-to-year, rising to a 6.1 months’ supply, with 406,000 available for sale. However, just 37,000 of those are completed and ready to occupy.
The median sales price rose to $423,300 in January from $395,500 in December. It’s up more than 13% compared to a year ago, primarily due to higher development costs, including materials.
Regionally, new home sales fell in three regions, the Northeast (down 10.7%), the Midwest (down 3.7%) and the South (down 7.4%). New home sales were up 1.2% in the West.
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