ARLINGTON, Va.—New home sales dipped 5.9% from April's downwardly revised rate of 817,000 annualized units to 769,000 units in May. Sales were up 9.2% versus May 2020.
NAFCU's Curt Long noted the data show home sales faced another setback in May.
"Year-over-year numbers remain strong, as it was not until July of last year that the housing market reached full throttle. Due to the sales slowdown, months of supply has risen to its highest level in a year. That should help tame prices, which were up 18% at the median from a year earlier,” said Long, NAFCU’s chief economist and vice president of research.
"Demand has been ebbing a bit as a result, though ultra-low mortgage rates should keep demand buoyant for the foreseeable future. Homebuilders are still struggling with the high price and low availability of building materials as well as a labor shortage. New housing is still sorely needed, but stories abound of builders waiting to break ground in an effort to wait out the supply constraints," he added. "NAFCU expects new home sales to remain elevated but not increase significantly until backlogs are cleared and prices dampen."
Sales rose in two Census regions in May, with the Northeast rising 33.3% followed by the West (+4.8%). Sales in the South fell by 14.5% while the Midwest was flat.
Skewed Numbers
Compared to a year ago, sales rose in all four census regions, but those numbers are skewed by the collapse of housing sales this time last year in response to the COVID-19 lockdowns.
Based on current month sales, there were 5.1 months of supply in May, up 0.5 months from April. The number of unsold homes left on the market was up to 330,000 units on the month. This represents a 5.8% increase from year-ago inventory levels.
The median new home price, non-seasonally adjusted, rose from $365,300 in April to $374,400 in May. This month's prices are up 18.1% from a year ago, Long noted.