Sales of new single-family homes plummeted 13.7% in May to a seasonally adjusted annual rate of 623,000, according to data released Wednesday by the U.S. Census Bureau and Department of Housing and Urban Development (HUD).
The May sales figures represent a sharp decrease from April’s 722,000 housing units and are 6.3% below May 2024’s rate of 665,000 units.
The swoon in new-home sales marks the steepest monthly decline since May 2022, according to First American Deputy Chief Economist Odeta Kushi. She noted that elevated mortgage rates and heightened macroeconomic uncertainty combined to suppress buyer demand.
“While one month doesn’t establish a trend, especially in such a volatile series, the decline in sales indicates buyer hesitancy,” Kushi wrote in an analysis. “Nevertheless, builders can utilize tools like mortgage rate buydowns, design upgrades and flexible pricing to attract buyers. They may need to rely more heavily on these incentives to entice those jittery buyers off the sidelines.”
While new-home sales had ostensibly risen 10.9% month over month in April, Kushi had previously cited “underlying concerns” with the April data, noting that it did not reflect heightened cancellations of sales contracts that month.
The recent report follows last week’s gloomy National Association of Home Builders and Wells Fargo survey, which revealed the third-lowest builder sentiment reading since 2012.
There were an estimated 507,000 seasonally adjusted homes for sale at the end of May, according to the joint Census Bureau and HUD report. That’s 1.4% above April’s estimate of 500,000 units. At the current sales rate, May’s new-housing stock represents 9.8 months of supply versus April’s estimate of 8.3 months.
An analysis by Wells Fargo economists Jackie Benson and Ali Hajibeigi noted that the May report reflects headwinds from increased resale inventory and “less-intense price appreciation for existing homes.” However, the Wells Fargo commentary observed that “a recent downtrend in single-family housing starts may ease the supply overhang somewhat.”
The median sales price of new houses sold in May was $426,600, according to the HUD and Census Bureau data, which is 3.7% above April’s revised mark of $411,400.
