New home sales jumped in May as homebuilders continue to experience a boom, according to new data from the U.S. Census Bureau and the Department of Housing and Urban Development.
Sales rose by 12.2% to a seasonally adjusted annual rate of 763,000, compared to April’s 680,000. They were up 20% from the same time last year, which saw an annualized rate of just 636,000.
The seasonally‐adjusted estimate of new houses for sale was 428,000, down from last month and representing a supply of 6.7 months at the current sales rate.
The median sales price for a new home was $416,300, while the average sales price was $487,300.
Homebuilders are working overtime to accommodate surging demand. Americans still want to buy homes despite the high-rate environment, but the existing inventory is low. New home construction surged in May at the fastest pace in over a year.
Builders are no longer having to slash prices to attract buyers, with only 25% offering price drops in June, a decline from previous months.
It’s not clear how long this building surge will last, however. Alicia Huey, Chairman of the National Association of Home Builders, noted that while supply chain issues are easing, making building easier and cheaper, lending is tightening.
“[A]ccess for builder and developer loans has become more difficult to obtain over the last year, which will ultimately result in lower lot supplies as the industry tries to expand off cycle lows,” she said.
The housing market continues moderating and will likely remain strong through the year. Both the S&P Corelogic Case-Shiller Index and FHFA House Price Index posted gains this month. Experts at Fannie Mae recently have suggested that housing strength will likely help float the economy out of the upcoming recession.
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