After tumbling more than 16% in April, new home sales rebounded in May, rising 10.7% to reach a seasonally adjusted annual rate of 696,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development.
However, new home sale were down 5.9% compared with May 2021.
The median sales price of a new home sold in May was $449,000. The average sales price was $511,400.
As of the end of the month there were about 444,000 new homes available for sale in the U.S.
That’s about a 7.7-month supply at the current sales rate.
Odeta Kushi, deputy chief economist for First American, says while the “monthly increase in new-home sales beat consensus expectations, but new-home sales data is volatile and one month does not make a trend.”
“New single-family home inventory fell slightly to a 7.7 months’ supply, up 34.5 percent over last year, with 444,000 available for sale,” Kushi says. “However, just 37,000 of those are completed and ready to occupy.
“By stage of construction, the share of completed homes/ready to occupy inventory in May was 8.3 percent, down from 9.7 percent one year ago, while the share of new-home inventory that is under construction increased from 63 percent to 65.8 percent. The share of completed homes sold was 27.3 percent, up from 24.2 percent one year ago, but still low compared with pre-pandemic levels. The share of homes ‘not started’ sold declined compared with one year ago.”
With mortgage rates and home prices on the rise, affordability has become a major concern – especially for new homes.
“Affordability is a growing challenge as higher new-home prices and rising mortgage rates are pricing out some buyers,” Kushi says. “One year ago, 23 percent of new-home sales were priced below $300,000. In May of this year, only 9 percent of new home sales were priced below $300,000. While the nation continues to face a housing shortage, new-home sales may slow as worsening affordability and higher construction costs take a toll on the new-home market.”
Photo: Todd Kent