[Washington] Higher home prices stemming from rising lumber and other building material costs as well as a lack of inventory due to a shortage of buildable lots offset solid demand for new home sales in December. Despite a brief slowing in sales activity toward the end of the year, new home sales in 2020 posted a strong 18.8 percent gain over 2019.

Sales of newly built, single-family homes in December rose 1.6 percent to an 842,000 seasonally adjusted annual rate, from a downwardly revised November reading, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“Sales growth continues in lower cost, lower density markets,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa, Fla. “Indeed, the Midwest posted a 24 percent sales gain in 2020. Looking forward, builders are concerned that increased regulatory burdens in 2021 could hurt housing affordability.”

“While the market remains solid, median home prices are increasing due to higher building material costs, most notably softwood lumber, and a shift to larger homes,” said NAHB chief economist Robert Dietz.

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 December reading of 842,000 units is the number of homes that would sell if this pace continued for the next 12 months.

Inventory remains low at just a 4.3 months’ supply, with 302,000 new single-family homes for sale, 18.9 percent lower than December 2019.

The median sales price was $355,900. The median price of a new home sale a year earlier was $329,500.

Regionally, and for 2020 totals, new home sales were up in all four regions: 21.2 percent in the Northeast, 24.2 percent in the Midwest, 17.6 percent in the South, and 18.9 percent in the West.