Despite all the talk of low housing inventory across the nation, Orion’s brokers should know that new homes sales soared nearly 21 percent in March to a 1.021-million-unit pace, well above expectations as February’s figure was also revised higher. While that month-over-month increase stands out, it actually understates the strength of the housing market. Exceptionally strong demand combined with savings built up from when potential borrowers were not dining out, or spending money for other discretionary services, has new home sales running at their highest pace since 2006!
Brokers should also know that nearly 75 percent of new homes sold in March were either under construction or not yet started, causing many builders to limit sales in new home communities as they struggle to obtain the lots, labor, and lumber they need to build more homes. Supply chain bottlenecks range from lumber and plywood to countertops, cabinets, molding, and appliances. There are also shortages of shipping containers. It has kept available inventory at just a 3.6-monthsupply, with this past month's marginal increase in inventory coming all from homes where construction has not yet started. Inventories of completed homes fell to a new all-time low, and will likely remain lean through the summer, if not longer.
Orion’s brokers should also remember that existing home sales are incredibly strong too, facilitating the migration away from high-priced housing markets to lower-cost areas, primarily in the South and Mountain West. February's cold weather sharply hurt sales in Texas and other parts of the South and Midwest, where new homes still tend to be inexpensive relative to many parts of the country. The median price of a new home declined from $346k in February to $331k in March, but home prices remain extremely volatile on a month-over-month basis. Home buyers may also be opting for less expensive homes to offset the impact of higher mortgage rates, although Orion’s rates have slid back down. Check them out!