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New listings of newly-built homes decreased by 4.1% year-over-year to a seasonally-adjusted rate of 74,000 in August, according to Redfin. This reverses the progress made in July with a 3.8% gain.
"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," said Redfin chief economist Daryl Fairweather. "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 the quarantine. The lack of new listings is keeping builders from reaching their full potential in terms of home-sales growth."
According to the report, the supply of newly-built homes for sale plummeted 33.6% year-over-year in August to 185,000. The number of existing homes on the market dramatically dropped by 38.3%, the largest decline since 2013, according to Redfin.
"Prices will keep going up if we don't see a meaningful increase in the supply of new homes on the market," Fairweather said. "Unfortunately, there are no signs that such an increase will occur anytime soon."
Unfortunately, the number of housing starts also dipped 5.1% and housing completions dropped by 7.5%, which doesn't bode well for those looking to purchase a new home under market prices.
"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 the National Association of Home Builders chairman Chuck Fowke. "More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months."
Click here for more from Redfin's report.