Lumber and labor shortages create roadblocks to new homes: Redfin
While the lending industry and housing sales continue to shine in the face of a pandemic-burdened economy, an already tight inventory could clamp down on future growth.
Sales of new homes grew 8.3% annually in August, but that was contrasted by new-home listings falling 4.1%, according to Redfin. These rates went from gains of 13.5% and 3.8%, respectively, in July.
Comparatively, existing-home sales jumped 10.5% year-over-year with those listings climbing 5.2%. Spikes in purchasing — driven by consumers looking for more space or to lock in low interest rates — take bites out of the shrinking housing supply.
"There's plenty of demand for new homes, but builders are facing a unique and costly set of hurdles as they attempt to satisfy that demand," Redfin Chief Economist Daryl Fairweather said in the report. "Listings of new homes aren't bouncing back as quickly as listings of existing homes because, unlike individual homeowners, construction companies have to deal with lumber and labor shortages during the pandemic. They're also competing for labor and materials with folks who are renovating their houses during quarantine. The lack of new listings is keeping builders from reaching their full potential in terms of home-sales growth."
The supply of newly constructed homes dropped 33.6% annually, paired with a 38.3% plunge in existing properties — marking the largest year-over-year declines for both sectors since Redfin started its tracking in 2013.
Naturally, heightened demand moving in lockstep with constrained supply leads to price growth. Median sales prices on new homes increased 4.1% annually in August to $378,000. Meanwhile, existing-home prices shot up 12.1% to $316,000. These rates both overshadowed July's annual growth rates of 2.3% for new homes and 9.3% for existing homes.
For construction to ramp up and quench a thirsty marketplace, homebuilders must deal with the double-edged sword of current conditions.
"Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber," said NAHB Chairman Chuck Fowke. "More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months."