New U.S. home sales jump in May: NAHB
June 27, 2023 By National Association of Home Builders
A lack of existing inventory coupled with solid consumer demand helped to boost new U.S. home sales in May to their highest level since February 2022.
Sales of newly built, single-family homes in May increased 12.2 per cent to a 763,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“Demand for new homes is strengthening because of a lack of existing home inventory,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala. “And while builders continue to grapple with elevated construction costs, an encouraging sign is a big gain in home sales priced in the $200,000 to $300,000 price range. In May 2022, just 5,000 homes sold in this range and that total increased to 12,000 in May 2023.”
“The lack of resale homes available for sale, at just a three months’ supply, is supporting demand for newly built homes,” said NAHB chief economist Robert Dietz. “New home inventory was 31 per cent of total inventory in May. Historically it is typically 10 per cent to 15 per cent. Further, the pace of resales is down 20 per cent from a year ago, while the rate of new home sales is up 20 per cent from a year ago.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the May reading of 763,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in May was 428,000, down 2.9 per cent compared to a year ago. This is down to a more balanced 6.7 months’ supply at the current building pace, despite tight existing home supply conditions. A measure near a six months’ supply is considered balanced.
The median new home sale price in May was $416,300, down 7.6 per cent compared to a year ago.
Regionally, on a year-to-date basis, new home sales are up 0.8 per cent in the Northeast and 1.6 per cent in the South. New home sales are down 2.5 per cent in the Midwest and 20.7 per cent in the affordability-challenged West.
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