New home sales in May rose 12.2% from April, which marks the third consecutive month of growth.
Sales of new single‐family houses came in at a seasonally adjusted annual rate of 763,000, according to estimates released jointly Tuesday by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 20% above the May 2022 estimate of 636,000.
Homebuilder confidence has been rising over the past few months, and housing starts rose 21.7% from April. Strong new home sales have gotten the new construction industry back on track to deliver much-needed inventory for this undersupplied market. They now supply about 30% of the residential sales market.
“This spring shopping season has buyers searching for listings and affordability – both of which can be found in new construction – with many builders offering incentives and fresh inventory,” said Zillow Senior Economist Nicole Bachaud in a statement. “This has brought a resurgence to the new construction industry with sales rising and home builder confidence climbing.’
The new home market stands in contrast to the existing re-sales market, which has sputtered due to record-low inventory and high listing prices. Still, Zillow economists said, there are signs that the existing home sales market might be growing.
The median sales price of new homes sold in May 2023 was $416,300 versus $396,100 for existing home sales. The average sales price for new homes was $487,300.
The seasonally‐adjusted estimate of new houses for sale at the end of May was 428,000. This represents a supply of 6.7 months at the current sales rate.
Demand has been resilient as people grow accustomed to interest rates in the 6%-7% range, and existing inventory remains tight, economists said. These factors are making new homes more visible on the market, while homeowners looking to trade up are attracted by new floor plans, more technology, as well as higher efficiency, noted George Ratiu, chief economist at Keeping Current Matters.
