Today the Census Bureau reported that 610,000 new home were sold in the previous month, and a nice revision of the April numbers up to 593,000.
The bad news is that median sales price rose to $345,800. Hopefully this is a one–off print instead of the start of an upward trend. In order for new home sales to grow and get more housing starts we will need to see more lower priced homes in the mix.,
Unlike existing home prices, new home prices adjusted to inflation are at all time highs but this is more due to more bigger homes being sold in this cycle than normal.
From Census: https://www.census.gov/construction/nrs/pdf/newressales.pdf
New Home Sales:
Sales of new single-family houses in May 2017 were at a seasonally adjusted annual rate of 610,000,
according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and
Urban Development. This is 2.9 percent (±13.0 percent)* above the revised April rate of 593,000 and is 8.9
percent (±21.9 percent)* above the May 2016 estimate of 560,000
The median sales price of new houses sold in May 2017 was $345,800. The average sales price was
For Sale Inventory and Months’ Supply:
The seasonally-adjusted estimate of new houses for sale at the end of May was 268,000. This represents a
supply of 5.3 months at the current sales rate.
For 2017 I was anticipated 4%-7% growth with possible better growth if the median sales price did not substantially increase (i.e. more smaller, less expensive homes were in the sales mix). This report didn’t support that, but we have had wild swings in median sales price before and then reversions back to the mean trend.
Context is always key with new home sales. Unit sales are still very low so there is room for growth. More smaller homes in the mix will lead to foster demand and more housing starts.
This week I was on Bloomberg financial speaking about this very topic. A link to the podcast can be found below. I do expect to see a better housing start print in the next month’s report, breaking the 3 month downtrend.
Mohtashami: Housing cycle not strong enough to warrant a crash
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami