New home sales in the United States are on the rise; offer, prices remain constraints

WASHINGTON, Aug.24 (Reuters) – Sales of new single-family homes in the United States increased in July after three consecutive monthly declines, but housing market dynamics slow as housing prices soar amid supply backdrop Restricted excludes certain first-time buyers from the market.

Although the Commerce Department report on Tuesday showed a sharp increase in the stock of new homes, the jump was sparked by a record increase in the number of homes that have yet to be built. Builders take longer to complete houses, hampered by expensive raw materials as well as scarcity of land and workers.

“While demand for new homes remains strong, high prices and construction delays will temper sales in the coming months,” said Nancy Vanden Houten, US economist at Oxford Economics in New York. “Homebuilders have reportedly turned away buyers as they try to reduce the backlog of sales.”

New home sales rose 1.0% to a seasonally adjusted annual rate of 708,000 units last month. The sales pace for June was revised to 701,000 units against 676,000 units previously reported.

Economists polled by Reuters had forecast new home sales, which account for 10.6% of US home sales, reaching a rate of 700,000 units in July. Sales fell 27.2% year-on-year in July. The median price of new homes climbed 18.4% from the previous year to a record high of $ 390,500 in July.

Sales jumped to a rate of 993,000 units in January, the highest since the end of 2006, due to historically low mortgage rates and a desire for spacious housing as Americans worked from home and attended classes in Canada. line during the COVID-19 pandemic.

The new housing market is being boosted by an acute shortage of used housing. But builders have struggled to take full advantage of supply squeeze, hampered by soaring lumber prices as well as shortages of other building materials and household appliances.

Although lumber prices have fallen sharply from record highs in May, they remain above their pre-pandemic levels. Reports this month showed building permits for single-family homes fell in July, while homebuilder confidence hit a 13-month low in August.

A report released on Monday showed sales of previously owned homes edged up in July. Read more

Stocks on Wall Street were trading higher, with the S&P 500 (.SPX) and Nasdaq (.IXIC) indices reaching record highs, boosted by oil and travel stocks. The dollar (.DXY) remained stable against a basket of currencies. The prices of the US Treasury were mostly lower.

CONDITIONS AT LESS COST

Last month’s gain in new home sales was fueled by a 1.3% increase in the populated south and a 14.4% jump in the west. Sales fell 24.1% in the Northeast and 20.2% in the Midwest.

“The pandemic has accelerated migration to suburban markets and metropolitan areas in low-cost states such as Arizona, Utah, Texas and Florida,” said Mark Vitner, senior economist at Wells Fargo in Charlotte, in North Carolina. “In contrast, new home sales have weakened in areas where population growth has slowed, in part due to an exodus of residents seeking more affordable real estate, lower taxes and others. lifestyle benefits. “

New home sales were concentrated in the $ 200,000 to $ 749,000 price range. Sales in the less than $ 200,000 price range, the sought-after segment of the market, accounted for only 1% of transactions.

“Affordability is becoming a growing issue in the new housing market,” said Bernard Yaros, economist at Moody’s Analytics in West Chester, Pennsylvania. “Selling prices for single-family homes are up 20% from their pre-pandemic level, which is slightly lower than the rise in selling prices in the existing home market, but enough to deter buyers. potentials. “

There were 367,000 new homes on the market in July, the highest since November 2008 and up from 348,000 in June. Houses to be built represent a record 28.6% of the supply. Completed houses only accounted for 9.8% of the supply.

At the pace of July sales, it would take 6.2 months to liquidate the supply of homes on the market, compared to 6.0 months in June. About 75% of homes sold last month were under construction or in the pipeline.

“We expect sales to increase during the year as sufficient demand is present, but the rate at which the acceleration occurs will likely be determined by how quickly home builders can clear their current backlogs. and overcome material availability and other supply constraints, ”said Mark Palim, deputy chief economist at Fannie Mae in Washington.

Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao

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