Given the ongoing uncertainty in almost all phases of American life, it is not surprising home builders have pulled back and new construction has slowed. New home sales declined in May 7.3% from April and 6.8% from May, 2025.
Meantime, mortgage rates increased to 6.49%. The median list price decreased slightly (0.6%) with homes selling at the same pace as a year ago..
Spring, so far, has seen slower than usual sales of new construction in most of the country but not in four metro areas where the market has been strong: San Diego, Los Angeles, Indianapolis, and Chicago.
The question, of course, is WHY?
In the case of the two Southern California cities, the answer is relatively simple: these are desirable areas where inventory has been quite limited. When there are homes to buy, they move quickly evenn though they are expensive.
Analysts say that Chicago has faced the same inventory shortage but developers are now building homes that are much cheaper than their West Coast counterparts.
Likewise, Indianapolis is featuring new homes that are relatively affordable in a desirable market
A number of churches in the Bay Area are building – or looking to build – affordable housing on the property they own the help ease the housing crisis in the area. Currently, St. Paul’s Episcopal Church in Walnut Creek is close to completing construction of 44 affordable apartments next to the church. Most will have income caps and be for renters earning between about $26,000 and $35,000 a year.
While there are other projects in Berkeley and West Oakland, many churches are facing obstacles fro zoning restrictions to neighborhood opposition as they try to relieve the housing problem.
One of the prime factors behind high real estate prices is the lack of inventory. And one of the prime factors behind the lack of inventory is the shortage of construction workers. this includes home framers, masons, carpenters, electricians and others.
It is estimated that 900,000 single-family homes will be built in2018 while 1,200,000 are needed to meet demand.
Besides slowing the rate of construction, a lack of workers also means higher costs as subcontractors are increasing their rates by as much as 10 percent this year alone.
According to a new report, there were more new homes sold in July 2016 than in nearly a decade. The 654,000 annual rate represents a 31 percent increase over July 2015.
just as important, builders have begun construction on new housing units at a pace greater than 1 million homes a year every month since April of 2015. This more than doubles the low of 478,000 units in the spring of 2009.
Interestingly, the median sale price for new homes declined from $310,500 to $294,6000 in June. Analysts believe this is because more homes are being built at the lower end of the housing market which is certainly good news for young adults looking to purchase their first home.