May New Home Sales: Continuing to Adjust

• Sales of new single‐family houses in May fell 7.8% to a seasonally adjusted annual rate (SAAR) of 626,000, according to
  
  the U.S. Census Bureau and the Department of Housing and Urban Development.  That's 3.7% below May 2018.
• The median sales price of new houses sold in May was $308,000, down 8.1% from April and 2.7% from a year earlier.
• The inventory of new houses for sale at the end of May was 333,000 (SAAR), up 0.3% from April and 10.3% from a year ago.

The dip in May new home sales comes as a surprise -- particularly following the drop in April. It's an indication that the market continues to adjust to an otherwise relatively healthy spring for new construction. It comes after a stretch of unexpectedly strong months to start the year, and that strength hasn’t entirely faded. The fact that sales in some of those early months were even higher than initially reported is an indication that many buyers stand ready to purchase what builders are putting up. Purchase mortgage applications have been underwhelming, but it could still be a matter of when – not if – buyers will take advantage of stubbornly low mortgage interest rates that don’t look set to rise meaningfully for the foreseeable future. Despite a step backward in single-family housing starts, builder confidence remains strong, and a recent uptick in single-family permits indicates better days are coming.