Newly built home sales in the United States experienced a notable surge in May, driven by a severe shortage of homes available for sale in the resale market. This marked the third consecutive month of increased sales, with May witnessing the largest jump since February 2022.
The strength in new home sales was observed across the nation, particularly in the Northeast and West regions. Home builders have emerged as one of the few providers of inventory for potential buyers, contributing to the overall higher sales of new homes.
According to the Commerce Department’s report on Tuesday, new home sales in the U.S. rose by 12.2% to an annual rate of 763,000 in May, compared to a revised figure of 680,000 in the previous month. These numbers are seasonally adjusted and represent the estimated number of homes that would be built over a year if the pace remains consistent each month.
The actual increase surpassed expectations on Wall Street, as economists had projected new home sales to reach 675,000 in May. It is worth noting that the data from April underwent significant revisions, revealing that new home sales had risen to a revised figure of 680,000, in contrast to the initial estimate of a 4.1% increase to 683,000.
It is important to acknowledge that new home sales data can be volatile on a monthly basis and are often subject to revision.
Key details from the report include a decrease in the median sales price of a new home sold in May, which fell to $416,400 compared to the previous month. Additionally, the supply of new homes for sale experienced an 11.8% decline between April and May, resulting in a 7-month supply.
Regionally, the Northeast and West regions led the nation in new home sales, with both areas recording approximately 17% increases. Overall, new home sales have seen a 20% growth compared to the previous year.
In a broader context, while the housing market continues to grapple with inventory shortages and higher mortgage rates, home builders are thriving as buyers seek new construction options with more availability. Builder confidence in future sales remains high, supported by homeowners holding onto the ultra-low mortgage rates they secured during the pandemic. Furthermore, the construction of new homes in the U.S. witnessed a substantial jump of nearly 22% in May/2023.
