Forecasts for Existing and New Home Sales (May 2019)

• Zillow expects May existing homes sales to rise 2.5% from April to 5.32 million units at a seasonally adjusted annual rate (SAAR). That would represent a drop of 1.5% from May 2018.
• We estimate new home sales will slip 0.9% from April to 667,181 units (SAAR) – which would be up 2.6% from May 2018.

Existing home sales

We expect May existing home sales, which will be released on Friday, June 20, by the National Association of Realtors (NAR), to grow from April unrevised figure – chipping away at the year-over-year deficit that has persisted since March 2018 caused by declines due to climbing mortgage rates, poor stock market performance and fears of a slowing economy. We should start to see positive year-over-year trends in the second half of the year.

Consumer confidence is strong, and mortgage applications for home purchases continue to climb steadily, although they have not yet risen at the pace that would be suggested by falling mortgage rates.

Affordability concerns form a headwind against those strong fundamentals. Home prices continue to rise, albeit at a slower pace, and inventory remains tight at the lower end of the market. Lower mortgage rates can only do so much to overcome those factors.

New home sales

New home sales experienced a setback in April, but remain higher in the first third of 2019 than they were in 2018. Still, there’s plenty of runway for growth: New home sales remain low historically. That means moderate increases are likely going forward.

Single-family permits also have been climbing, a sign that better days may be coming – although it’s not clear precisely when. Builders will be watching, because new home sales suggest there’s room for more homes to be built.

The U.S. Census Bureau is scheduled to report May 2019 new home sales on Tuesday, June 25.