May New Home Sales Jump 11%
In a month of generally negative housing data, May’s new home sales stood out as the only positive sign, up by over 11% from April, according to Friday’s HUD and the Census Bureau report. In May, new single-family home sales increased to a seasonally adjusted annual rate of 696,000, up 10.7 percent from the revised April pace of 629,000 but down 5.9 percent from a year earlier, according to the data.
The sales vary by region. In the most prominent area, the South, sales increased by 1.5 percent from last year to 413,000 units in May, while sales in the West increased by 0.5 percent and increased by 39.3 percent to 202,000 units from 145,000 units in April. Seasonally adjusted from 47,000 units in April to 23,000 units in May and down 42.5 percent from a year earlier, sales in the Northeast decreased by 51.1 percent. Sales in the Midwest fell by 37 percent from a year ago and 18.3 percent in May to 58,000 units from 71,000 units in April.
According to the data, the median sales price of brand-new homes sold in May dropped to $449,000. The average sales price decreased to $511,400. At the end of May, the seasonally adjusted estimate of new homes for sale increased slightly to 444,000, which, based on the current sales pace, represents a supply of 7.7 months.
Pending Home Sales Post Surprise Increase In May, Likely Due To Brief Pullback In Mortgage Rates
The National Association of Realtors reports that pending home sales—a gauge of contracts to buy existing homes—rose modestly in May, up 0.7 percent from April, disrupting a six-month trend of decreasing demand. However, sales were still 13.6% below May 2021 levels.
Mortgage rates have been on the rise for buyers since the beginning of the year, but in May, they started to decline slightly, which may be the cause of the increase in sales. The overall active inventory climbed as more supply entered the market, and some homes remained on the market for a long.
According to Mortgage News Daily, the 30-year fixed mortgage average reached a high of 5.64 percent in the first week before dropping to 5.25 percent by the month’s end. It increased once more to a little over 6 percent by mid-June.
As per Realtor.com, the number of homes for sale has finally started to increase, up 21 percent from a year ago. However, it is still only approximately 50% of pre-Covid levels. Additionally, the median listing price increased by around 17% last week, remaining stable for the third week.
Regionally, pending home sales in the Northeast increased by 15.4%% over the previous month and decreased by 11.9% over May 2021. Sales in the Midwest were down 8.8 percent from a year ago and were down 1.7 percent for the month. Sales in the South were up 0.2 percent month over month but down 13.8 percent yearly. The West, where homes are most expensive, saw the most significant drop in sales, down 5.0 percent for the month and 19.8 percent from the previous year.
Home Price Indices Approach, Exceed 20% Annual Rate
The S&P CoreLogic Case-Shiller Indices indicated annual home price appreciation at 20.4 percent, while the Federal Housing Finance Agency House Price Index reported yearly appreciation at 18.8 percent.
S&P DJI, which publishes the S&P CoreLogic Case-Shiller Indices, managing director Craig J. Lazzara, said April’s findings showed preliminary but erratic indicators of a slowdown in the growth rate of U.S. home prices. Lazzara pointed out that a more difficult macroeconomic situation might not be able to sustain an extraordinarily high home price rise for very long.
U.S. home prices increased 1.6 percent in April, according to FHFA. According to the agency’s estimate, house prices rose 18.8 percent between April 2021 and April 2022.
Will Doerner, Supervisory Economist of FHFA’s Division of Research and Statistics, stated, “House price appreciation continues to remain elevated in April,” said Will Doerner, Supervisory Economist of FHFA’s Division of Research and Statistics. “The inventory of homes on the market remains low, which has continued to keep upward pressure on sales prices. Increasing mortgage rates have yet to offset demand enough to deter the strong price gains happening across the country.”
Next week’s potential market-moving reports are:
- Monday, July 4th – No Report
- Tuesday, July 5th – Factory Orders
- Wednesday, July 6th – ISMServices Index, Job Openings, Quits
- Thursday, July 7th – ADP Employment Report, Initial Jobless Claims, Continuing Jobless Claims
- Friday, July 8th – Unemployment Rate, Labor Force Participation Rate, Average Hourly Earnings
As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.
