The U.S. Census Bureau and the US Department of Housing and Urban Development released February 24 new home sales and new 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.
After climbing to record-level highs during the second half of last year, sales of new homes in the US retreated in January following a flurry of purchases at the end of 2021. New home sales fell -4.5% to 801,000 units last month from 839,000 in December, the US Commerce Department said on Thursday. Sales tumbled -19.3% from 993,000 units in January 2021.
The median price of a new home, however, was sharply up in January, to US$423,300 from US$395,500 the previous month. This is up a whopping +13.4% from a year earlier when it was US$373,200.
There were 406,000 new homes on the market in January, up from 394,000 in December and up from 302,000 in January 2021.
Underlying demand for new homes remains solid, fuelled in part by record low inventory in the resale market. At the sales pace in January it would take a normal 6.1 months to clear the supply of houses on the market, up from 5.6 months in December, and compared with very tight 3.6 months a year ago.
Shrewd investors know that construction framing softwood lumber prices are a good leading indicator for US housing activity, including home building and home sales. Don’t miss out, get lumber price data updates directly to your desktop every Friday morning.
Benchmark Dimension Softwood Lumber Prices: February 2022
Looking at lumber prices, after staying flat during most of February, for the week ending February 18, 2022, the price of benchmark softwood lumber commodity item Western S-P-F 2×4 #2&Btr KD (RL) was US$1,330 mfbm, which is up by +$100, or +8%, from the previous week when it was US$1,230.
That week’s price is up by +$153, or +13% from one month ago when it was US$1,178.
STAY AHEAD of US housing price data by getting access to softwood lumber prices. Released every Friday for that week, since 1952 Madison’s Lumber Prices is used by the forest products industry as a price guide for North American construction framing dimension softwood lumber. These are, of course, the inputs into US and Canadian home building materials.
The number of homes sold in January and awaiting the start of construction — a measure of backlogs – rose from a month earlier to 237,000. The total number of homes sold with construction under way eased to 368,000. Houses under construction made up 65% of the inventory, with homes yet to be built accounting for about 26%. The backlog of homes approved for construction but yet to be started is at an all-time high.
* Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS
Madison’s Benchmark Top-Six Softwood Lumber and Panel Prices: Monthly Averages
Lumber market players drew increasing comparisons to the unprecedented market observed last year at this time, though prices weren’t quite at those dizzying levels yet. A ceaseless overall lack of available Western S-P-F lumber and studs continued to bring buyers back to the table repeatedly.
US Median New House Prices January & Benchmark Softwood Lumber Prices February: 2022
Builder backlogs of projects awaiting construction remain elevated and indicate residential building will stay firm in coming months and contribute to economic growth.