May Home Sales Forecast: Trends Point to Continued Upward Climb
- Zillow expects existing home sales to increase 1.2 percent in May from the previous month, reaching 5.51 million units at a seasonally adjust annual rate (SAAR).
- New home sales should fall 7.7 percent in May to 571,000 units (SAAR) after an unexpectedly strong April, but remain 12.7 percent above their year-earlier level.
May home sales should continue their recent upward trajectory. Existing home sales are poised to extend a recent string of consecutive monthly gains, while sales of new homes look set to fall a bit from April’s high-water mark but remain up from a year ago.
Zillow expects May existing home sales to increase 1.2 percent at a seasonally adjusted annual rate (SAAR) from April, to 5.51 million units in May (figure 1). It would be the third consecutive monthly increase in existing home sales, putting existing home sales 4.2 percent above their May 2015 level and higher than in any month since February 2007.
New home sales were exceptionally strong in April, surging 16.6 percent from March to 619,000 units (SAAR) – the largest month-over-month increase in new home sales since January 1992. In some respects, this increase was not surprising: The number of single-family permits, starts and homes under construction all showed strong gains in early 2016. As these homes come onto the market, sales should pick up.
Although we expect new home sales to retreat in May from their April highs, falling 7.7 percent on a monthly basis to 571,600 units (SAAR), sales at that level would still be 12.7 percent above May 2015 levels (figure 2). The median seasonally-adjusted price of new homes sold in April also surged, rising 9 percent to an all-time high of $321,700. Similar to sales trends, we expect the median price of new homes sold in May to retreat 2.8 percent from April, but still be up 8.9 percent on an annual basis.
