New Home Sales Tumble in May
The U.S. Census Bureau and the Department of Housing and Urban Development reported Tuesday morning that sales of new homes in May decreased to a seasonally adjusted annual rate of 626,000, a drop of 7.8% from the revised April rate of 679,000 and a decrease of 3.7% compared with the May 2018 rate of 650,000. The consensus estimate from a survey of economists projected a rate of around 680,000. The April 2019 rate was revised downward by 44,000. New home sales totaled 705,000 in March, the highest total since November 2017.
Despite the sharp drop in May new home sales, sales are up 4% in the first five months of 2019 compared to the same period in 2018.
At their 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 slipped by $34,200 to $308,000 and the average sales price fell month over month by $16,500 to $377,200. At the end of May, the number of new homes for sale on a seasonally adjusted basis totaled 333,000, up by 1,000 month over month, and represented a supply of 6.4 months at the current sales rate.
In May, 47% of the estimated 60,000 monthly total comprised sales for homes priced at less than $300,000. The percentage is up nine percentage points from April. The pricing data suggests that more first-time buyers were able to buy a home in May, and that’s good news for homebuilders.
Sales of homes priced between $300,000 and $399,999 dipped month over month from 27% to 23% of all sales. Sales of homes in the range of $400,000 to $499,999 fell by three points to 13% of the total, and sales dropped by four points to 10% for homes sold in a price range of $500,000 to $749,999. Home sales for properties priced above $750,000 accounted for 6% of all new home sales in May, up two points compared with March.
In the South, seasonally adjusted new home sales for the first five months of 2019 were up 4.9% year over year; in the Northeast, sales are down more than 17%; in the Midwest, sales are up more than 6%; and in the West, sales tumbled by nearly 36%.
On a non-seasonally adjusted basis, homes sold In the South rose by 1,000 to 37,000 month over month in May. Home sales were flat at 3,000 in the Northeast, while sales in the Midwest were flat at 8,000. Sales in the West fell by 7,000 to a total of 12,000.
The non-seasonally adjusted for-sale inventory at the end of the month was up by 1,000 in the Northeast to 29,000 and up by 3,000 in the South to 182,000. In the Midwest, new homes for sale totaled 39,000, unchanged month over month, while supply in the West rose by 3,000 to 82,000.
It’s worth noting that the monthly totals are subject to multiple revisions and those revisions are often significant.