Continuing drops seen in May, sales of new US single-family homes fell in June as the median price of newly built houses softened somewhat but remained high compared to previous months and compared to one year ago.
The U.S. Census Bureau and the US Department of Housing and Urban Development released July 26 new home sales and house price data. New home sales comprise 10% of real estate activity and are considered a leading housing market indicator as they are recorded when contracts are signed.
Continuing drops seen in May, sales of new US single-family homes fell in June as the median price of newly built houses softened somewhat but remained high compared to previous months and compared to one year ago.
There were 676,000 new homes on the market in June, down -6.6% from 724,000 in May. At the sales pace in June, it would take a healthy 6.3 months to clear the supply of houses on the market, up from 5.1 months in May and from 4.6 months in April.
After reaching a record a record US$374,400 in May, the median sales price moderated down to US$361,800. House supply has lagged behind demand, as builders are constrained by high lumber prices as well as shortages of other building materials, household appliances, land, and labour. The ratio of homes sold in July either still under construction or yet to be built was 77%, up from an incredible 76% in June.
Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Monthly Averages
As for the lumber market, the latest construction framing dimension softwood lumber and panel price movement downward has been enough to motivate previously reluctant customers to start making purchases again. Other circumstances, like wildfires and extreme heat in the usual timber supply areas, are adding uncertainty to how the rest of 2021 summer is going to go.
After touching exactly the price of one year ago, in the week ending July 23, 2021 the wholesaler price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr fell yet more. That week’s price of US$500 mfbm is down by -$55, or -10%, from the previous week when it was $555, and is down by -$706, or -59%, from one month ago when it was $1,206.
When compared to the same week last year, when it was $590, that week’s price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr is down by -$90, or -15%.
Compared to two years’ ago when it was $352, the price is up by +$148, or +42%.
US Median New House Prices June and Benchmark Softwood Lumber Prices July: 2021
Builder backlogs of projects awaiting construction remain elevated and indicate residential building will stay firm in coming months and contribute to economic growth.
Benchmark Softwood Lumber Item Western Spruce-Pine-Fir KD 2×4 #2&Btr Price: 2019 to Present
Encouraging US single-family construction activity kept momentum going for lumber sales, even as sales volumes were dropping. It seemed like the market could turn on a dime. The appetite for wood remains strong, it’s just that customers have collectively balked at those unprecedented high prices of two months ago. Are price levels approaching the bottom, prompting many to pull the trigger and make the purchases they have been holding off on, preferring to wait is prices will drop further?
Only the next week or two will tell.