Data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau just before Christmas shows that sales of newly built, single-family homes in November increased 5.8% to a seasonally adjusted annual rate of 640,000. At the same time, on a year-to-date basis, new home sales are down 15.2%. The National Association of Home Builders (NAHB) attributes the “slight bounce” that new home sales received in November to moderating mortgage rates, but points to a housing market that continues to struggle because of ongoing supply chain disruptions, elevated construction costs and challenging affordability conditions for the overall depression, compared to last year’s sales numbers.

“Declining mortgage rates during the second half of November, combined with builder sales incentives, lifted the pace of new home sales for the month,” said NAHB chairperson Jerry Konter, a homebuilder and developer from Savannah, Ga. “However, due to higher construction costs and ongoing supply-chain issues, the median price of a newly-built single-family home in November was $471,200, 9.5% higher than a year ago.”

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the November reading of 640,000 units is the number of homes that would sell if this pace continued for the next 12 months.

“The impact of higher construction costs has made building entry-level homes particularly difficult, and this is where we see the greatest amount of pricing out for the housing market,” said NAHB chief economist Robert Dietz. “In November 2021, 13% of new home sales were priced below $300,000. That share has now fallen to 7%.”

Regionally, on a year-to-date basis, new home sales fell in all four regions, down 3.6% in the Northeast, 22.3% in the Midwest, 13.1% in the South and 19.3% in the West.