New Home Sales Dropped in November Yet Remain Strong
New home sales are slowing a bit but demand remains high. Can home builders keep up?
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According to the most recent data from the U.S. Census Bureau, sales of new single-family homes in the United States dropped 11 percent from October to November 2020, coming in at a seasonally adjusted annual rate of 841,000 units.
Home sales gradually slowed in the last few months of the year after hitting a historic 13-year high in July 2020 but remain much higher they were the year before. Even with the month-over-month dip, the rate of new home sales in November 2020 was still 20.4 percent higher than it was in November 2019.
In a recent statement, Chuck Fowke, chairman of the National Association of Home Builders, noted some of the key challenges in the U.S. housing market currently limiting further growth.
“Though the market remains strong, the pace of sales pulled back in November as inventory remains low and affordability concerns persist as builders grapple with a shortage of lots, labor and building materials,” he said.
The coronavirus pandemic has certainly been tricky for home builders and contractors to navigate. Stay-at-homers orders gave homeowners more time to consider their surroundings. Now historic numbers of people are seeking to buy new homes or upgrade their current ones at a time when some building materials are hard to come by. That drives up material prices and the cost of new homes, complicating things even further.
“The home building industry saw a historic gap between the pace of new home sales and construction of for-sale single-family housing this fall,” said Robert Dietz, chief economist for the NAHB. “As a result, the pace of new home sales was expected to slow to allow construction to catch up. This appears to have occurred in November as inventory of completed, ready to occupy new homes was down 43 percent compared to November 2019 at just 43,000 homes nationwide.”