• New home sales fell 5.9% in May from April, to 769,000 (SAAR), according to the U.S. Census Bureau. The level is the lowest since May 2020, but remains higher than at any pre-pandemic point since 2007.
• The median sales price of new houses sold in May 2021 was $374,400, up 2.5% from April and 18.1% year-over-year.
• The seasonally‐adjusted estimate of new houses for sale at the end of May was 330,000. This represents a supply of 5.1 months at the current sales rate.

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Much like existing home sales, supply-side constraints kept a lid on new home sales volume in May — but instead of limited inventory of existing for-sale homes, the materials in short supply for builders in May included key items, like framing lumber, that are crucial to the homebuilding process. New home sales activity is generally less-sensitive to these sorts of supply disruptions, but — despite having fallen sharply in the last few weeks — lumber prices are still well above what they were a year ago, and many other key building materials have limited availability or none whatsoever. As a result, new home prices continue to push firmly higher and getting new projects started is becoming more difficult. Homebuyer demand for new homes is still strong, particularly as the number of existing homes available for sale remains limited, and builders in most markets are having little trouble selling through the homes they have put up — even to the point where they are limiting sales in some cases so they don’t completely sell through their stock. But the supply constraints are hindering the number of homes they’re able to build and ultimately sell, and the sales volume they can comfortably take on without exposing themselves to more price risks is somewhat limited. Still, despite the sharp pullback from more-recent highs, new home sales volume remains higher than any pre-pandemic high since 2007 — and year-to-date sales volume is up 27.2% from the same period in 2019 (prior to pandemic distortions). But ultimately, while there are signs that this slowdown may prove fleeting and cooling lumber prices could allow builders to soon begin or resume projects with more confidence, it will take a while for the industry to truly reaccelerate. A meaningful uptick in sales volume may not be on the immediate horizon.