May New Home Sales Skyrocket to Highest Rate in Six Years

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The U.S. Census Bureau Tuesday morning released data on new single-family home sales for May. Sales rose 18.6% month-over-month, to a seasonally adjusted annual rate of 504,000, from a downwardly revised April sales figure of 425,000. The revised April estimate dropped 8,000 sales from the original estimate of 433,000.

Economists had expected a seasonally adjusted annual rate of 441,000 for May. The May rate is 16.9% above the rate for May 2013. At the peak in 2005, new home sales posted a seasonally adjusted annual rate of nearly 1.4 million.

The Census Bureau also reported that the median sales price for new homes sold in May was $282,000 and the average sales price was $319,020. The median price rose $6,400 month-over-month and the average price fell by $990. At the end of April, the number of new homes for sale slipped from an April total of 192,000 to 189,000, a supply of 4.5 months at the current sales rate.

The median and average prices dropped sharply in April, with the median price down nearly $15,000 and the average price tumbling more than $13,000. The rise in May’s median price was partially offset by lower mortgage loan rates. There was also a boost at the end of April in new home inventory, a boost that helped sales in May. The sharp inventory increase at the end of April was the first month-over-month gain for the year. The drop in end-of-May inventory helped push prices up again.

Homebuilder stocks reacted positively to the report. Meritage Homes Corp. (NYSE: MTH) added about 1.3% Tuesday morning. Year to date, Meritage is down about 14%. Shares traded at $41.29 in a 52-week range of $37.19 to $50.28.

Another homebuilder, PulteGroup Inc. (NYSE: PHM) traded about 1.5% higher as well, at $20.13 in a 52-week range of $14.23 to $21.65. Year to date, PulteGroup shares are down less than 1%.

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