New home sales surged 12.2% month-over-month in May to a seasonally adjusted annual rate of 763,000 units (consensus 665,000) from a downwardly revised 680,000 (from 683,000) in April. On a year-over-year basis, new home sales were up 20.0%. The lower sales prices helped drive new home sales to their highest level since February 2022. New home sales activity is being helped by the tight supply of existing homes for sale.
We have seen in the weekly mortgage applications reports that the pullback in mortgage rates spurred some renewed demand among home buyers. Reality is though with rates over 6.5%, and inflation high- and real-income hurt lower affordability and supply pressures remain for many prospective buyers.
US new home sales for May 2023
- New home sales surged 12.2% month-over-month in May to a seasonally adjusted annual rate of 763,000 units (consensus 665,000) from a downwardly revised 680,000 (from 683,000) in April.
- On a year-over-year basis, new home sales were up 20.0%.
- The median price of new houses sold was $416,300 while the average sales price was $487,300, compared to $450,700 and $521,500 respectively a year ago.
- New home sales month-over-month by region: Sales increased 17.6% to 40K in the Northeast, 17.4% to 175K in the West, 11.3% to 471K in the South and 4.1% to 77K in the Midwest.
- The seasonally‐adjusted estimate of new houses for sale at the end of May was 428,000. This represents a supply of 6.7 months at the current sales rate
Note new home sales in the West has the highest concentration of higher-priced homes. The report reflects how rising mortgage rates are impeding sales of higher-priced homes, evidenced by the year-over-year declines in both median and average selling prices.
The report confirms the effect of rates and new home sales remain concentrated in higher-priced homes, as inflation pressures, pushed by supply constraints and labor shortages, are curtailing the building of lower-priced homes and pinching affordability for lower-income buyers.
Existing home sales account for 90% of US transactions and are calculated on a contract close basis. New home sales account for the remaining 10% and are based on contract signings.
The big question is after the surge in rates and slash in rates how much damage has been done with the massive wealth erosion.
From The TradersCommunity News Desk