Buyers were dragged by soaring mortgage rates and highs. Builders have been plagued by previously recorded shortages of costs and the worst surges.
By Wolf Richter of WOLF STREET.
In February, inventory of newly built single-family homes increased to 407,000 (seasonally adjusted), the largest unsold inventory since August 2008, up 40% year-on-year. According to today’s Census Bureau data, this is equivalent to 6.3 months of supply with current sales.
Problematic mix.. Homebuilders are faced with historic soaring costs and are plagued by a shortage of materials, supplies and labor that have stagnated construction projects and prevented them from completing. Potential buyers are plagued by soaring mortgage rates and prices that skyrocketed last year. This is turning into a problematic mix.
Sale of new homes In February, seasonally adjusted annual rates fell to 772,000 units, down 6% year-on-year. Sales are well below the boom period of 2002-2006.
New home sales are registered when a sales contract is signed, not when a transaction is closed, unlike existing home sales, which are tracked when the sale actually ends. New home sales trends tend to be an early but volatile indicator of home sales growth.
Median price The number of single-family homes sold, which seems to have reached some limit last year, fell to $ 400,600 in February, down about 7% from its November 2021 peak ($ 430,300), to the same extent since July 2021. It went up and down. ($ 406,000).
As a result, it decreased from 20% year-on-year, which was furious until November last year, to 10.7% year-on-year.
Please note that the ridiculous price surge from June 2020 to July 2021 and the price may have reached some upper limit at the end of last year.
Construction cost According to another Census Bureau data today, the proportion of single-family homes, excluding land and other non-construction costs, surged 17% year-on-year and surged 17% for the third straight month. These were the worst cost surges in the data dating back to 1964, among all sorts of shortages and delays, and everyone was able to pass higher prices.
This graph shows a year-on-year increase in the construction cost index for new single-family homes.
The graph below shows the actual index and index value. Since June 2020, the index has skyrocketed by 24%. Notice what happened during the residential bust. Between April 2007 and February 2012, the construction cost index fell by 11%.
Homebuilder stock I plummeted into the news. Their stock price will move by early this afternoon:
- R. Houghton [DHI]: -4.3%
- Renner [LEN]: -3.6%
- PulteGroup [PHM]: -3.2%
- NVR [NVR]: -1.5%
- Taylor Morrison [TMHC]: -4.7%
- Meritage Homes [MTH]: -4.4%
- KB Home [KBH]: -4.5%
- Century community [CCS]: -4.7%
- LGI Homes [LGIH]: -7.8%
However, sentiment towards homebuilders has worsened since December last year. The WOLFSTREET Homebuilders Index, based on the total market capitalization of the above nine homebuilders, fell 4% earlier this afternoon, down 26% from its 52-week high in December last year, to August. It has returned to its initial state. 2020:
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