Last week the U.S. Census Bureau and the U.S. Department of Housing and Urban Development released their New Home Sales report. It showed that there were 769,000 signed contracts on new single-family houses in the month of May. This was a drop of about 5.9% from April’s reporting, but is still 9.2% higher than the 704,000 from May 2020.
Inventory levels are still very tight. There were only 330,000 new homes for sale in May. At the current sales pace there is only a 5.1-month supply.
The median average sales price of these homes sold in May is steadily increasing at a current level of $374,400. This goes to show that builders are focusing on building more expensive homes and not building as many lower-priced, more affordable homes. The reason for this is that there is not enough of a margin available to builders because of the increase in price of materials and the labor shortage.
Once materials become more affordable and builders hire more workers, we should see more homes built and hopefully more lower priced homes to help sop-up the purchase demand which mostly comes from first time home buyers.