New home sales surge as lumber prices skyrocket
New home sales jumped to the highest in more than 14 years last month as home prices continue to increase around the U.S.
By the numbers: Single-family new home sales rose 20.7% from February to a 1.02 million seasonally adjusted annual rate. That was the fastest sales pace since September 2006.
- Inventory fell to 3.6 months of supply, with just 307,000 new single-family homes for sale, 44.6% lower than March 2020.
One level deeper: The median sales price of a new home sale in March rose to $330,800, up from $328,200 a year earlier, when COVID-19 lockdowns began.
What to watch: The price of lumber is soaring, making new home construction and do-it-yourself home projects even more expensive, as Axios Charlotte's Katie Peralta Soloff wrote Saturday.
- Lumber costs have surged more than 300% over the last year, according to FactSet.
- The spike has added more than $24,000 to the average price of a new single-family home, according to the National Association of Home Builders.
The state of play: Lumber demand is far outpacing supply. During the pandemic, shutdowns forced sawmills to stop production.
- At the same time, quarantining Americans embarked on all types of DIY projects, bolstering home-improvement companies like Lowe's.
- Lumberyards and homebuilders held off on buying lumber for months, hoping that prices would come down, Fortune reported.
Of note: Rent prices also are starting to rise.
- Median asking rent rose 1.1% year over year in March to $1,463 a month in the 50 largest U.S. markets, according to a report from Realtor.com. That marked the first month where the pace of rent growth had increased since last summer.
- Real estate investors say the rental market is primed for another period of increased price growth, comparable to the years that followed the global financial crisis when effective rents outpaced inflation, WSJ reports.
- In some markets, like Nashville and Denver, they increased more than 10% for multiple years, Matthew Lawton, an executive in the capital-markets division at brokerage JLL, told WSJ.