New Home Sales Jump 12.2% Higher in May
Faced with a dearth of existing homes for sale, buyers flocked to new-home options even in the shadow of higher interest rates.
WASHINGTON – Solid consumer demand and a lack of existing for-sale homes helped boost May’s new home sales to its highest level since February 2022.
Sales of newly built, single-family homes in May increased 12.2% to a 763,000 seasonally adjusted annual rate, according to data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“While builders continue to grapple with elevated construction costs, an encouraging sign is a big gain in home sales priced in the $200,000 to $300,000 price range,” says Alicia Huey, chairman of the National Association of Home Builders (NAHB. “In May 2022, just 5,000 homes sold in this range. That total increased to 12,000 in May 2023.”
“The lack of resale homes available for sale – at just a three months’ supply – is supporting demand for newly built homes,” adds NAHB Chief Economist Robert Dietz. “New home inventory was 31% of total inventory in May. Historically, it is typically 10% to 15%.
“Further, the pace of resales is down 20% from a year ago, while the rate of new home sales is up 20% from a year ago.”
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 May reading of 763,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in May was 428,000, down 2.9% compared to a year ago. This is down to a more balanced 6.7 months’ supply at the current building pace, despite tight existing home supply conditions. A measure near a 6 months’ supply is considered balanced.
The median new home sale price in May was $416,300, down 7.6% compared to a year ago.
Regionally, on a year-to-date basis, new home sales are up 0.8% in the Northeast and 1.6% in the South. New home sales are down 2.5% in the Midwest and 20.7% in the affordability-challenged West.
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