Affordability and Lack of Supply Put a Dent in Home Sales


After a surge in the pace of new home sales in earlier in the year, the monthly growth rate of newly built single-family home slowed during recent months. Sales exceeded construction starts by a historic margin at the end of the summer. This necessitated an increase in starts and some slowing of sales. Nonetheless, the acceleration of sales in 2020 has left new home inventories down significantly year-over-year.

According to estimates from the Census Bureau and HUD, November new home sales declined by 11% for the month to a 841,000 seasonally adjusted annual rate. This is the lowest rate since June. Despite the pullback, the November sales rate was 21% higher than a year ago, as housing demand continues to be supported by low interest rates, a renewed consumer focus on the importance of housing, and rising demand in lower-density markets like suburbs and exurbs. On net, sales are up 19.1% on a year-to-date basis for 2020 thus far.

Looking back to the spring, the April data (570,000 annualized pace) marks the low point of sales for the 2020 recession. The April rate was 26% lower than the prior peak, pre-recession rate set in January. Sales then mounted a historic surge from April to July, outpacing gains in actual construction.

Sales-adjusted inventory levels increased somewhat in November, coming in at a 4.1 months’ supply, after four consecutive months below an incredibly low reading of 3. Inventory increased in November, but remains 11% lower than a year ago. Inventory of completed, ready to occupy homes is down 43% over the last year, down to a count of just 43,000 homes nationwide.

Consequently, sales growth has ramped up for new homes that have not started construction, with that count up 67% year-over-year in November. These measures point to continued gains for single-family construction ahead.


The median sales price in November was $335,300. The median price of a new home sale a year earlier was $328,000, as prices have increased with gains in building materials and larger home sizes.

Regionally, on a year-to-date basis new home sales were up in all four regions: 28.2 percent in the Northeast, 24 percent in the Midwest, 16.9 percent in the South, and 20.5 percent in the West.

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