New-home sales remained solid in November, although persistently low inventory and rising home prices are starting to take their toll.
November sales of new single-family homes were at a seasonally adjusted annual rate of 841,000, according to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development. While that’s up 20.8% from November 2019’s seasonally adjusted pace, it’s down 11% from October.
Chuck Fowke, chairman of the National Association of Home Builders (NAHB), attributed the downshift to unsuitable supply and affordability concerns, with builders working to keep pace but contending with a shortage of lots, labor and building materials. With furious sales surpassing building, it was inevitable that new-home sales would see a slowdown, added NAHB chief economist Robert Dietz.
“The home building industry saw a historic gap between the pace of new-home sales and construction of for-sale single-family housing this fall,” Dietz said. “As a result, the pace of new-home sales was expected to slow to allow construction to catch up.
“This appears to have occurred in November as inventory of completed, ready-to-occupy new homes was down 43% compared to November 2019 at just 43,000 homes nationwide.”
For-sale inventory at the end of November was at 286,000 units, a supply of 4.1 months at the current sales rate. That’s actually an improvement from the tight 3.3-month-supply posted in October, breaking a four-month streak of inventory under four months’ supply. Still, inventory remains at tenuously low levels, down 11.2% from November 2019.
New-home prices, meanwhile, continue to grow, with November’s median sales price at $335,300, up from $330,600 in October and $328,000 in November 2019.