Single family new homes sales rose 7.6% in May to a seasonally adjusted rate of 369,000 units, according to the U.S. Census Bureau. The data reflects the first jump in actual new home sales in three months after disappointing spring home sales soured home builders.
The Northeast and South posted a solid jump in sales for the month, with the Northeastern corridor experiencing a 36.7% hike in sales during the month. Sales elsewhere through the nation were inconsistent but still showed growing strength above the past two months.
“The relatively strong increase in new home sales this May is an indication that more potential home buyers are being drawn to the market by today’s excellent mortgage rates as well as firming conditions in some local economies,” said Barry Rutenberg, chairman of the National Association of Home Builders. “In addition, more people are recognizing the benefits that new homes can provide beyond what’s available in the existing housing stock in terms of energy efficiency, updated technology and other features.”
The May sales figures are welcome news for home builders after the National Association of Realtors reported disappointing home re-sales during May, despite the fact that existing home sales have increased in volume for 11 straight months over the prior year.
“May’s sales report is a welcome sign that the market has returned to a more solid growth path following lackluster reports in March and April, and is in keeping with our expectations for continued, steady improvement through the end of this year,” said NAHB chief economist David Crowe.
“While the current sales rate remains low by historical standards and continues to be constrained by challenges related to credit availability for builders and faulty appraisals, the ongoing decline in the month’s supply of new homes will necessitate additional construction in certain markets.”
The inventory of new homes on the market listed for sale was almost unchanged, staying at a low level of 145,000 units in May. The figure reflects an historically slim 4.7-month supply of new homes at the current pace of sales.
However, the figure does not include existing homes listed on the market or the 1.4 million units in the shadow inventory of homes not yet foreclosed or formally taken back by lenders waiting to be listed on the open market.