Considering that mortgage applications for new home purchases were down in June, it probably shouldn’t come as a shock that when the new home sales data for June came out, it showed that sales were down too.
New data from the Census Bureau and the Department of Housing and Urban Development shows that new home sales fell by 6.6% in June.
That’s now the third straight month of declines for the sales of newly built homes.
According to analysis of the data from the National Association of Home Builders, June’s lackluster new home sales put sales on the slowest pace since April 2020.
Nevertheless, NAHB notes that new home sales are still up 13.5% year-to-date compared to the same time period last year.
As has been the case for all of 2021, construction costs seem to be to blame for the slowdown in new home sales.
“Sales continued to trend lower in June as some builders slow sales contracts to manage supply-chains, amidst longer delivery times and higher construction costs,” said NAHB Chairman Chuck Fowke. “While lumber prices have shown some improvement in spot markets, these declines take time to translate into lower construction costs.”
As evidence of how much construction costs are impacting homebuilding, NAHB notes that the inventory of homes for sale that have not yet begun construction is up 84% over last year.
However, NAHB Chief Economist Robert Dietz suggests that June’s sales could end up looking a little better than they do right now.
“The June data came in lower than expected, and we anticipate an upward revision next month,” Dietz said. “Nonetheless, sales have trended lower as construction costs have increased and builders have sought to manage material delays and cost challenges in the construction pipeline, in addition to dealing with shortages of lots and labor in many housing markets.”