NAHB: New Home Sales Surge in May 2023
According to recent data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly constructed single-family houses surged by 12.2% to a seasonally adjusted annual rate of 763,000.
New home sales experienced a significant boost in May, reaching the highest level since February 2022, driven by limited inventory and robust customer demand.
“Demand for new homes is strengthening due to a scarcity of existing home inventory,” stated Alicia Huey, a developer based in Birmingham, Alabama, and the head of the National Association of Home Builders (NAHB).
“While builders are grappling with increased construction costs, it is encouraging to see a significant increase in home sales within the $200,000 to $300,000 price range. In May 2022, only 5,000 homes were sold in this range, whereas in May 2023, the figure rose to 12,000.”
Robert Dietz, the Chief Economist for NAHB, emphasized the impact of limited resale home availability, stating, “The shortage of existing homes for sale, with just a three months’ supply, is bolstering demand for newly built homes.”
“In May, new home inventory constituted 31% of the total inventory, which is historically higher than the typical range of 10% to 15%. Additionally, while the pace of resales has declined by 20% compared to last year, the rate of new home sales has increased by 20%.”
The term “new home sales” refers to the sale of a new home at any stage of construction, whether unfinished, under construction, or completed.
The May reading of 763,000 units, accounting for seasonal fluctuations, indicates the number of homes that would be sold if the current pace were maintained for the next 12 months.
In May, the number of new single-family homes available on the market was 428,000, marking a 2.9% decrease from the previous year.
Despite tight supply conditions in the existing housing market, this translates to a more balanced 6.7 months’ supply at the current construction rate. A supply close to six months is considered a balanced market.
The median sale price for new houses in May was $416,300, reflecting a 7.6% decrease from the previous year.
On a regional basis, new home sales have seen a year-to-date increase of 0.8% in the Northeast and 1.6% in the South. However, sales have declined by 2.5% in the Midwest and 20.7% in the West, where affordability remains a challenge.
