New Home Sales Show Historic Backlog

Despite the ongoing pandemic, new home sales in the United States are still showing a historic backlog. According to the National Association of Realtors (NAR), existing home sales rose 1.6% in June, while new home sales jumped 8.7%. This is the highest level of new home sales since 2007 and shows that demand for housing remains strong despite the economic downturn caused by COVID-19. The NAR report also showed that median prices for existing homes rose 6.5% from a year ago to $295,300 in June, while median prices for newly constructed homes increased 5.3% to $321,400 during the same period. This suggests that even though there is an increase in demand for housing, buyers are still being cautious about how much they are willing to spend on a property due to economic uncertainty caused by the pandemic. In addition to rising prices and increasing demand, there is also a backlog of new homes waiting to be sold due to delays in construction caused by lockdowns and other restrictions imposed during the pandemic. According to data from real estate analytics firm Zillow Group Inc., there were over 300,000 unsold new homes on the market as of July 2020 – an increase of 40% from 2019 levels and more than double what it was just five years ago. This backlog has been attributed largely to supply chain disruptions and labor shortages resulting from COVID-19 restrictions. While this backlog could potentially lead to higher prices if it continues into 2021 or beyond, experts say that this should not be seen as an indicator of future price increases but rather as a reflection of current market conditions caused by pandemic-related disruptions. They point out that with interest rates remaining low and many people looking for more space amid stay-at-home orders, demand for housing should remain strong going forward regardless of any potential supply issues caused by construction delays or labor shortages related to COVID-19 restrictions.