Can the housing market get too hot? It’s starting to appear that way, with builders struggling to keep up with demand for new homes.
After selling more homes than they’re able to construct, builders are now restricting sales to avoid being overwhelmed — causing prices to climb even higher, according to the Wall Street Journal.
Low interest rates and work-from-home edicts pushed sales of new homes to levels not seen in years during the pandemic. But the prices for those new homes are beginning to soar due to the low supply builders are currently able to provide, hampered by labor shortages and rising construction costs.
Several companies are being forced to turn away buyers due to a lack of available homes. Those with available homes are either selling them first-come, first-serve or having buyers enter lotteries. Some are even asking for offers to be submitted above list prices.
Buyers, it seems, are playing ball. While the median cost of an existing home is $363,300, the median price of a new home as of June was $361,800, according to the Commerce Department. That marks a 6.1 percent increase from last year.
More data reveals the stark discrepancy between building houses and selling them. Housing starts experienced a 29 percent increase year-over-year from last June to this June. Over the same year, new home sales declined by 19 percent.
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[WSJ] — Holden Walter-Warner