VOL 2023 ISSUE 4
PUBLISHED BY THE EL PASO ASSOCIATION OF BUILDERS : NATIONAL , STATE AND LOCAL HOME BUILDING INDUSTRY NEWS
New home sales jump amid lower rates , tight existing home supply
Lower mortgage rates and limited existing inventory helped to push new home sales up in March , even as builders continue to grapple with increased construction costs and material supply disruptions . Sales of newly built , single-family homes in March increased 9.6 % to a 683,000 seasonally adjusted annual rate from a downwardly revised reading in February , according to newly released data by the U . S . Department of Housing and Urban Development and the U . S . Census Bureau .
“ A lack of resale inventory combined with many builders offering price incentives helped to push new home sales higher in March ,” said Alicia Huey , chairman of the National Association of Home Builders ( NAHB ) and a builder and developer from Birmingham , Ala . “ However , sales are down 3.4 % compared to a year ago because of the shortage of electrical transformer equipment and building material price volatility .” “ The average Freddie Mac mortgage rate gradually fell from near 6.7 % at the beginning of March to 6.3 % at the end of the month , and this helped to push new home sales higher in March ,” said Danushka Nanayakkara-Skillington , NAHB ’ s assistant vice president for forecasting and analysis . A new home sale occurs when a sales contract is signed or a deposit is accepted . The home can be in any stage of construction : not yet started , under construction or completed . In addition to adjusting for seasonal effects , the March reading of 683,000 units is the number of homes that would sell if this pace continued for the next 12 months . New single-family home inventory fell 9.5 % in March , however , it remained elevated at a 7.6 months ’ supply at the current building pace . A measure near a 6 months ’ supply is considered balanced .
Completed , ready-to-occupy inventory stood at 70,000 homes in March and is up 119 % from a year ago . However , that inventory type remains just 16 % of total inventory . Total new home inventory peaked in October at 466,000 and has been declining since that time , with a total inventory of 432,000 available for sale in March . The median new home sale price rose in March to $ 449,800 , up 3.2 % compared to a year ago . Elevated costs of construction have contributed to a rise in home prices . Regionally , on a year-to-date basis , new home sales rose 1.7 % in the Northeast , but fell 19.6 % in the Midwest , 5.8 % in the South and 32.2 % in the West .
Single-Family Starts Improve in March Single-family production showed signs of a gradual upturn in March as stabilizing mortgage rates and limited existing inventory helped to offset stubbornly high construction costs , building labor shortages and tightening credit conditions . Overall housing starts in March decreased 0.8 % to a seasonally adjusted annual rate of 1.42 million units , according to a report from the U . S . Department of Housing and Urban Development and the U . S . Census Bureau . The March reading of 1.42 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months . Within this overall number , single-family starts increased 2.7 % to an 861,000 seasonally adjusted annual rate . However , this remains 27.7 % lower than a year ago . The multifamily sector , which includes apartment buildings and condos , decreased 5.9 % to an annualized 559,000 pace . “ With builder sentiment climbing for four consecutive months and single-family starts continuing to move gradually higher from low levels since the beginning of the year , this indicates that a turning point for singlefamily construction will occur later this year after declines in 2022 ,” said Alicia Huey , chairman of the National Association of Home Builders ( NAHB ) and a custom home builder and developer from Birmingham , Ala . “ However , builders are still challenged by ongoing supply-chain issues and a skilled labor shortage .” “ We expect choppiness for single-family construction in the months ahead , with the 2023 data posting significant year-over-year weakness before improving on a sustained basis ,” said NAHB Chief Economist Robert Dietz . “ The multifamily market softened in March , and we anticipate ongoing declines for apartment construction in the months ahead due to tighter lending conditions in the commercial real estate sector .” On a regional and year-to-date basis , combined single-family and multifamily starts were 8.3 % lower in the Northeast , 34.5 % lower in the Midwest , 11.5 % lower in the South and 28.2 % lower in the West . Overall permits decreased 8.8 % to a 1.41 million unit annualized rate in March . Singlefamily permits increased 4.1 % to an 818,000 unit rate , but are down 29.7 % compared to a year ago . Multifamily permits decreased 22.1 % to an annualized 595,000 pace . Looking at regional permit data on a yearto-date basis , permits were 24.5 % lower in the Northeast , 25.3 % lower in the Midwest , 15.7 % lower in the South and 28.1 % lower in the West . The number of single-family homes under construction in March was 716,000 , the 10th monthly decline . In March , builders completed 15,000 more homes than began construction , resulting in a decline for the construction pipeline . There are now 958,000 apartments under construction , which is the highest level since the fall of 1973 .