Sales of newly built homes dropped in June, hitting their lowest level since the onset of the coronavirus pandemic in April 2020, according to the U.S. Census Bureau. Sales of new single-family homes fell 6.6% below May's rate, from 724,000 to 676,000, and 19.4% from June 2020, when they were at 839,000. The numbers were a major reversal for analysts, who had been expecting home sales to increase.
The drop comes as a result of factors like the rising prices of both homes and building materials. The median price of a newly built home rose 6% from June 2020 to June 2021. While that's considerably lower than the 15%-20% jumps seen in previous months, many buyers still can't afford the higher prices.
Mortgage rates also rose a quarter of a point in June, adding to the expense.
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Meanwhile, Covid-related supply-chain shortages have affected the cost of materials, slowing construction and driving up home prices. The price of softwood lumber soared more than 300% during the pandemic, and though it has since fallen, it's still 75% higher than its 2019 average. "We also know there are shortages of appliances, labor, and affordable lots," said Peter Boockvar, chief investment officer at the Bleakley Advisory Group.
The number of new homes for sale jumped from a 5.5-month supply in May to a 6.3-month supply in June. "We are shifting our tone on the housing market based on our analysis of proprietary data showing early signs of a cool down," said builder analyst Ivy Zelman in a note last month.
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