April New Home Sales: Running Lean

• April new home sales were down 5.9% from March but up 48.3% year-over-year, to 863,000 (SAAR), according to the U.S. Census Bureau.
• The median sales price of new homes sold in April was $372,400, up 20.1% from April 2020.
• There were 316,000 new homes available for sale in April (seasonally adjusted), up 3.9% from March but down 1.6% from April 2020.

New home sales volume remains well above pre-pandemic levels, but it's become very clear that the high and volatile price of lumber and other key building materials is introducing challenges to the new home building and sale process. In order to account for uncertain prices and availability of materials, home builders are holding off on making homes available until further along in the construction process. But this restriction is not due to a lack of demand – in fact, it’s likely quite the opposite. Homes are selling about as quickly as ever, and many builders are expressing the fact that sales could be higher if materials-related constraints weren’t there. With so few existing homes available for-sale, would-be buyers continue to eagerly seek out newly constructed homes, even as prices rise. There were 683,000 new homes sold in 2019, and the current pace of sales is well on track to exceed that figure this year, even despite the most recent slowdown. While lumber prices have recently shown some indications that their recent meteoric rise may finally be abating, the prices and availability of other building materials continue to grow. With homebuyer demand unlikely to relent, it appears as if the home construction industry may have to start operating at a leaner capacity – with builders scaling back on construction and the time from permit to completion increasing. Meanwhile, while these macro factors are likely weighing on activity to some degree, sales volume remains strong -- and could find another gear if/when the recent volatility in material prices cools off a bit.