Key Takeaways from the May New Home Sales Report
- New home sales increased for the second month in a row in May, totaling 546,000 units (SAAR) and surpassing the recent February high of 545,000 units (SAAR). New home sales volumes are the highest they’ve been since February 2008.
- The median price of new homes sold fell 3.4 percent month-over-month after rising in April, continuing its downward movement begun in November 2014.
After a 9.4 percent decline in March to start the spring, new home sales have more than made up those losses, according to data from the U.S. Census Bureau.
Sales of newly built homes posted a strong April (up 8.1 percent from March) and May (up 2.2 percent from April), registering 546,000 units sold at a seasonally adjusted annual rate (SAAR) last month. Sales are at their highest level this year and their highest overall level since February 2008 (figure 1).
Of the four major census regions – the West, South, Midwest and Northeast – the annual pace of sales grew in only the West and South last month, up 25 and 33 percent year-over-year, respectively. On a monthly basis, sales in the Northeast led the way in May, up an astonishing 88 percent from April. The West was the only other region to show a monthly increase in sales in May, rising 13 percent from April.
Even though the Northeast has only accounted for an average of 5 percent of total national new home sales since 2000, it contributed almost half of the total increase in sales this month. The Northeast also led the country for existing home sales in May.
The median sale price of a new home had been increasing since 2010, peaking in November 2014 as home builders focused on constructing higher-end homes. Since then, however, the price of newly built homes has fallen in five of the last six months. The median sale price fell 3.4 percent in May from April, to $280,400 (SA), but the price of a typical new home is still 5 percent above its 2007 peak.
New home construction starts and completions were down more than 5 percent (SAAR) in May. Despite increases in construction since activity bottomed out in 2009, construction activity still remains below 1990s levels and is likely to keep overall sales volume low into the summer, despite falling prices.