New Home Sales Surged 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 increased to a seasonally adjusted annual rate (SAAR) of 676,000, a rise of 16.6% from the revised April rate of 580,000 and an increase of 12.9% compared with the May 2019 rate of 600,000. The consensus estimate from a survey of economists projected a rate of around 636,000. The April rate was revised downward by 43,000.
For the year to date, new home sales are up 1.9% compared to the first five months of 2019, with an annualized sales total of 683,000 and an estimated 300,000 new home sales through May.
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 rose by $8,000 to $317,900, and the average sales price rose by $4,300 from the previous month to $368,800.
At the end of May, the number of new homes for sale on a seasonally adjusted basis totaled 325,000, down by 6,000 month over month, and represented a supply of 6.3 months at the current sales rate.
In May, 45% of the estimated 64,000 monthly sales total comprised sales for homes priced at less than $300,000. The percentage is down two points from April. The pricing data suggests that fewer first-time buyers were able to buy a home in May.
Sales of homes priced between $300,000 and $399,999 increased month over month from 24% to 27% of all sales. Sales in the range of $400,000 to $499,999 dipped by two points to 12% of the total, and sales slipped by one point to 11% for homes sold in a price range of $500,000 to $749,999. Home sales for properties priced above $750,000 accounted for 4% of all new home sales in both months.
While new home sales are generally a leading indicator of U.S. economic performance, now is not one of the times that guideline holds true. The COVID-19 pandemic has stalled the U.S. economy, and only when Americans feel safe to resume their usual activities will the economy recover.
It’s worth noting that the monthly totals are subject to multiple revisions and those revisions are often significant.