How homebuilders are competing in this crazy market

New home sales in 2021 picked up right where they left off in 2020, near their highest levels in more than a decade thanks to low inventory. The state of the market means increased competition among homebuilders, who are grappling with how to keep prices affordable as their own costs rise.

Sales of new single-family houses in January were at a seasonally adjusted annual rate of 923,000 — 4.3% above December’s rate, and a whopping 19.3% higher than original estimates by the U.S. Census Bureau and the Department of Housing and Urban Development.

Regionally, new home sales declined 13.9% in the Northeast, and rose in the other three regions, up 12.6% in the Midwest, 3% in the South and 6.8% in the West.

Unsurprisingly, another month of record-low mortgage rates, limited supply of existing homes, and a wave of millennial buyers resulted in the market maintaining a blistering sales pace in the start of 2021. Supply is still tight – the Census Bureau calculated just 307,000 new homes were on the market, roughly four months worth of supply at the current sales rate.

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