New Home Sales Show No Signs of Improvement

Despite recent reports of a historic backlog in new home sales, the market shows no signs of improvement. According to the latest figures released by the National Association of Realtors, new home sales are still far below pre-pandemic levels. The number of newly constructed homes sold in April 2021 was 619,000, which is a 7.7% decrease from March 2021 and down 11.1% from April 2020. This marks the third consecutive month that new home sales have decreased year-over-year and indicates that the housing market has yet to fully recover from the economic impacts of COVID-19. The backlog in new home sales has been attributed to several factors, including rising lumber prices due to increased demand for building materials and an overall shortage of skilled labor due to pandemic restrictions on movement and work. The lack of available land for development is also contributing to the backlog as many local governments have imposed strict zoning regulations that limit construction activity in certain areas. The situation is further complicated by rising mortgage rates which have made it more difficult for potential buyers to qualify for loans or refinance existing mortgages. As a result, many potential buyers are unable or unwilling to purchase a new home at this time, leading to further stagnation in the housing market. While some experts remain optimistic about future growth in new home sales, others fear that these issues will continue to impede progress until there is an increase in available inventory and improved access to financing options for potential buyers. Until then, it appears that the backlog will remain an issue with no end in sight.