Builders abandoned the market below $300,000.
By Wolf Richter for WOLF STREET.
Sales of new single-family homes in March, in terms of a seasonally adjusted annual rate, fell 8.6% for the month and 12.6% year-on-year to a rate of 772,000 homes, according to Census Bureau data today. Sales remain well below the boom years of 2002-2006.
New home sales can serve as an early indicator of the housing market because the data is recorded when sales contracts are signed, not when transactions are completed, unlike existing home sales.
Sales by stage of construction: Homes that had not yet started construction accounted for 33% of sales. Houses under construction accounted for 43%. And completed homes accounted for 23% of sales.
Inventory of new single-family homes for sale rose to 407,000 homes in March (seasonally adjusted), the largest unsold inventory since August 2008, up 52% from a year ago. This represents 6.4 months of supply at the current rate of sales.
Homebuyers have faced a historic spike in mortgage ratesin addition to the historic price spike, a toxic mix that made shopping increasingly difficult or impossible for many buyers, and drove them out of the market.
The average 30-year fixed mortgage rate rose from 4.1% in early March to 4.8% at the end of the month, up 1.5 percentage points from a year earlier, according to the Mortgage Bankers Association. Since then, mortgage rates have crossed the 5% mark:
Homebuilders have faced a historic spike in costsamid shortages of materials, supplies and labor that have hampered construction projects and stalled deliveries of completed homes.
Single-family home construction costs — excluding land and other non-construction costs — rose 1.5% in March and 17.3% year-over-year, according to separate data from the Census Bureau today. It was the fourth consecutive month of 17% year-over-year cost spikes, the worst in data dating back to 1964. The previous record was the 14.6% peak in July 1979. And c was the 11th consecutive month. two-digit points:
The median price of single-family homes sold is strongly biased by the change in mix: The bottom has fallen from the low end where now very few homes are sold. In March, only 15% of homes were selling for less than $300,000. In March 2021, another 35% of homes were selling for less than $300,000.
Now the bulge brackets are between $300,000 and $500,000, accounting for nearly half of March home sales.
The price hike is the result of price increases and manufacturers moving to go where the money is. And that caused the median price in March to jump 21% year-over-year to $436,700. The median price means that half of the homes sold were over $436,700.
Do you like to read WOLF STREET and want to support it? You use ad blockers – I completely understand why – but you want to support the site? You can donate. I greatly appreciate it. Click on the mug of beer and iced tea to find out how:
Would you like to be notified by e-mail when WOLF STREET publishes a new article? Register here.