Even as lumber costs come down from spring highs, the homebuilding industry continues to face headwinds that could keep it from delivering new units.
New Hampshire home prices continued to bound upwards in May, even as the total number of homes on the market shrank.
The statewide median single-family sale price for May hit $375,000 according to The Warren Group, publisher of The Registry Review, marking a new record for that month by a wide margin. The figure was 21 percent above May 2020 and 31 percent above May 2019, showing the continued influence of the homebuying rush that unfolded over the last 12 months. The year-to-date median sale price is $345,000, The Warren Group reported.
A large part of the increase stems from continued strong buyer demand and limited inventory, the New Hampshire Association of Realtors said in a statement released along with its own market data report.
Single-family inventory, at 1,517 houses, was less than half what it was in May of last year and two-thirds of the same tally in May 2019, when the market was already tilted in sellers’ favor and before the COVID-19 pandemic and record-low interest rates warped the typical spring residential real estate market.
May’s inventory figures also represented the smallest seasonal spring bounce in the number of single-family homes for sale since 2005, the earliest year for which NAHR reported data in its monthly market report. The statewide market bottomed out at 1,250 homes for sale in February of this year, rising only to 1,328 in March and 1,515 in April. That compares to jumps like that seen in 2019, when the market hit its low point in February of that year at 3,866 single-family homes before rising 20.6 percent to 4,665 in May and 5,611 in June.
The numbers of new single-family listings that hit the market in May also represented a historic low, with only 2,006 houses for sale, just below the 2,053 homes that came online in May 2020, when the state was still in the grips of the COVID-19 pandemic and the market’s direction was uncertain.
All told, this May saw less than one month’s supply of homes on the market as the average time it took for a single-family home to go pending stayed below 30 days, this time hitting the lowest point it’s been at since at least 2005: 25 days.
Little Relief Seen
The low inventory and rising prices resulted in dramatically fewer single-family home sales than in pre-pandemic years, with only 1,525 recorded statewide in March, The Warren Group said, a 12 percent increase from May 2020 but a 26 percent drop from May 2019. Year-to-date, there have only been 4,281 single-family sales in New Hampshire, compared to 4,449 by the end of May last year and 5,267 by the end of May 2019.
The continued high levels of demand also showed in the average share of list price that sellers received. NHAR reported that figure was 104 percent for May, compared to 98.7 percent in both May 2020 and May 2019, as bidding wars and multiple-offer situations helped push prices higher.
As of publication time, the nationwide average interest rate on a 30-year, fixed-rate mortgage appears to be holding steady at or just below 3 percent, according to Freddie Mac, after a brief surge to 3.18 percent in late March due to inflation fears on Wall Street. The likely result? Continued demand from buyers who are able to afford more expensive homes than in years past.
“Mortgage rates continue to drift down as markets concur with the view that inflation increases are temporary,” Sam Khater, Freddie Mac’s chief economist, said in a June 17 statement. “While mortgage rates are low, purchase demand has weakened over the last couple of months, primarily due to affordability constraints stemming from high home prices. With inventory tight, the slowdown in demand has yet to impact prices, meaning the summer will likely remain a strong seller’s market.”
In its statement about the May housing market, NAHR said the chief way out of the situation would involve the delivery of more newly built homes. However, even with lumber prices dropping drastically from their spring high, the homebuilding industry faces headwinds, NHAR said.
“[I]ncreasing material and labor costs, along with supply chain challenges, have contributed to significantly higher construction costs, with builders passing these costs on to homebuyers,” NHAR said. “And while the warmer temperatures, rising sales prices, and the reopening of the economy may draw more sellers to the market, historically low levels of homes for sale are likely to continue for some time.”
