New Home Sales Up Sharply; Prices Slump

The sales of new homes surged in May, outpacing the consensus of expectations, and while one months' data is just that, both median and average home prices were down sharply.

The U.S. Census Bureau and the Department of Housing and Urban Development estimated that newly constructed homes sold at a seasonally adjusted annual pace of 689,000 units.  This is 6.7 percent higher than the estimate for April, which was downgraded from an original estimate of 662,000 to 646,000.  May sales are 14.1 percent higher than those a year earlier; they were at a rate of 604,000.

The consensus of analysts' forecasts for the results was 665,000.  The range of those polled by Econoday 655,000 to 700,000.

On a non-adjusted basis there were 65,000 homes sold during the month.  The April total was 62,000 and in May 2017 there were 57,000 new homes sold.

Sales of newly constructed homes year-to-date (YTD) through May total 294,000.  This is up 8.8 percent from sales during the first five months of 2017, 270,000 units.

New home sales are down 10.0 percent in the Northeast compared to April and are 16.3 percent lower than in May 2017.  They are lagging 2017 on a YTD basis by 3.7 percent.

Sales in the Midwest were unchanged from April, but they have surged by 40.3 percent on an annual basis.  Compared to the first five months of last year, there has been a 15.2 percent increase in sales.

In the South sales increased by 17.9 percent and 19.2 percent respectively from April and a year earlier.  They are up 15.2 percent YTD.

There was a decline of 8.7 percent in sales in the West compared to the previous month, but the region managed to maintain an 0.6 percent edge on the May 2017 estimate.  Year-to-date sales are 11.2 percent higher than the same period in 2017.

Home prices were down compared to both April and the previous May and on both a median and an average basis.  The median price of a home sold in May was $313,000 (it was $318,500 in April) and the average was $368,500 (down from $394,600).  In May 2017 the median sales price was $323,600 and the average was $378,400. Forty-three percent of homes sold were priced under $300,000.  This was the largest percentage of such sales since at least last May.

There were 299,000 homes available for sale at the end of the reporting period, an estimate supply of 5.2 months at the current rate of sale.  Only 60,000 of that number are available for occupancy. The median time homes have been for sale since completion is 3.7 months.