New home sales increased in the Midwest, the South, and the West, while decreasing in the Northeast.
Strong demand stemming from low interest rates, favorable demographics, and a suburban shift for home building to smaller, more affordable housing markets helped to lift new home sales in January 2021, but rising lumber and material costs threaten to blunt this momentum. Sales of newly built, single-family homes in January rose 4.3% to a 923,000 seasonally adjusted annual rate, from an upwardly revised December reading, according to recently released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“Historically low mortgage rates and solid demand spurred an increase in new home sales in January, with the sales pace more than 19 percent higher than a year ago,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa, Fla. “However, rising affordability issues are looming this year, particularly increasing building material costs, including lumber, which is adding $24,000 to the price of a typical newly-built home. Builders also cite rising regulatory issues as a potential concern.”