New Home Sales Hit 13-Year High Mark in July 2020
New home sales continued to climb in the peak of summer, leading to one of the best months for home building in more than a decade.
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According to data from the U.S. Census Bureau, new home sales across the country increased 13.9 percent from June to July 2020, hitting a seasonally adjusted annual rate of 901,000 units. That is the highest recorded pace since 2006 and a 36.3 percent increase since July 2019.
“This is exactly what NAHB’s builder confidence survey has been indicating in recent months,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). “Consumers are being driven by low-interest rates, a growing focus on the importance of housing and a shift in buyers seeking homes in lower-density areas.”
New home sales are up eight percent on a year-to-date basis, which has led to correspondingly high levels of activity for home builders across the country. Housing starts in July spiked to their highest levels since 2016, leading to the kinds of activity typically seen in the wake of major tropical storms.
One of the only things holding housing back at all is the rising cost of construction materials, in particular softwood lumber, which has more than doubled.
“Despite these positive conditions, affordability challenges remain especially as builders are dealing with building cost increases, including a dramatic rise in lumber costs in recent months,” said Fowke.
The NAHB recently reached out to the White House in an open letter calling for federal action that would lower lumber prices. The White House has yet to respond.
In the meantime, there is still plenty of work for home builders across the country, thanks to an unflagging demand for housing that shows no signs of slowing.
“New home sales are benefitting from the suburban shift, as prospective buyers seek out affordable markets in order to obtain more residential space,” said NAHB Chief Economist Robert Dietz.
“Moreover, sales are increasingly coming from homes that have not started construction, with that count up 34 percent year-over-year. In contrast, sales of completed, ready-to-occupy homes are down almost 24 percent. These measures point to continued gains for single-family construction ahead.”