May New Home Sales: Buyers Resilience Bumps Up New Sales

• There were 696,000 new home sales nationwide in May (SAAR), up 10.7% from April and down 5.9% from May 2021, according to the U.S. Census Bureau.
• The median sales price of new houses sold in May 2022 was $449,000.
• The seasonally-adjusted estimate of new houses for sale at the end of May was 444,000, a supply of 7.7 months at the current sales rate.

Newly constructed home sales ticked up from revised April numbers in May, beating the consensus. In the face of rising interest rates, affordability is the worst it’s been in at least 15 years, but buyers are resilient, finding any way they can to make a home purchase and increasing inventory of new homes provides more opportunities for buyers to jump in while they still can. But with interest rates continuing to rise in recent weeks, it’s expected that total home sales will continue to decline year-over-year. Builders have started to adjust their plans with housing starts down from the elevated levels of the past two years, when demand was at a frenzy. While there’s still a large number of housing projects in the pipeline, any further slowing of new sales will likely further depress builders' confidence as they plan future output. If builders pull back, the market could miss out on inventory that would aid in a much-needed rebalancing, continuing the inventory shortage that has played a big role in the run-up in prices during the pandemic.