Despite higher mortgage interest rates, new single-family homes sales grew 3.7% in January and existing home sales were up 3.3%, starting the year off on a positive note.
However, contrasts exist when comparing inventories: New home inventory grew to 265,000 in January, while the inventory of existing homes for sale dropped 7% from a year ago, down to just a 3.6 months’ supply. Given the need for additional inventory, single-family construction volume is expected to expand in 2017, although supply-side bottlenecks continue to restrain growth potential.
Recent data show the supply of available residential AD&C loans expanded in the final quarter of 2016, albeit at the slowest rate since 2013. And increasing demand for building materials spurred a 14% jump in lumber prices over a three-week period in February. To improve future lumber pricing, the U.S. home building industry needs a new softwood lumber agreement with Canada and new sources of domestic and international supply.
–NAHB Chief Economist Robert Dietz
Financing Standards Continue to Ease
New Home Sales Post Slight Increase