Construction Costs, Inventory Shortage Slow Home Sales in April

The median sales price rose 20% from a year ago to $372,400 and the average sales price to $435,400, said the government report.

“Higher costs have priced out buyers, particularly at the lower end of the market,” said Robert Dietz, chief economist at the National Association of Home Builders. “A year ago, 45% of new home sales were priced below $300,000. In April 2021, only 27% of new home sales were priced below $300,000.”

Lumber Costs Soar Under Supply Shortages and Import Tariffs

Costs for lumber, steel and other building materials have soared in 2021, impacting construction and home prices. Construction starts for new single-family homes fell 13.4% in April, said NAHB. Lumber prices, up nearly 300% from a year ago, have added nearly $36,000 to the price of a new home, said NAHB Chairman Chuck Fowke. He added that the situation will only become worse if the administration goes through with doubling the tariffs on Canadian lumber to 18.32%.

“Affordability factors are clearly affecting new home sales,” said Fowke. “A growing number of builders are limiting sales in order to manage supply chains, including access and cost factors associated with lumber, appliances and other building materials. Policymakers need to find ways to improve the supply chain by facilitating more domestic production, or in cases where that cannot be done, suspending tariffs to allow for more imports.”