New-home sales in the US unexpectedly declined last month as prices moved higher, government data showed Wednesday.
Single-family home sales dropped 7.3% sequentially to a seasonally adjusted annual rate of 580,000 units in May, the Census Bureau and the Department of Housing and Urban Development said. The consensus in a Bloomberg poll was for a 3.2% gain.
"New home sales were much weaker than expected in May, but we think the pace of sales in May probably marks the bottom of what will be a noisy range over the next few months rather than the start of a more sustained decline," Oxford Economics Lead Economist Nancy Vanden Houten said in remarks emailed to. "We expect sales to improve later in the year based on our forecast for mortgage rates to move lower."
The median price of new houses sold increased 2% month over month to $424,900 in May, while the average sales price advanced 7.8% to $540,600.
"New home price growth will probably continue to be tempered by the use of builder incentives to encourage sales," according to Vanden Houten.
New-home sales dropped 27% and 4.1% sequentially in the West and South, respectively, official data showed. The Northeast and Midwest logged growth of 3% and 16%.
Inventory of new houses for sale inclined 2.3% to 496,000 units at the end of May. That represents a supply of 10.3 months at the current sales rate, up from a 9.3 month supply in April, according to the report.
"The inventory of completed new homes for sale is off its recent high but remains close to levels last seen in 2009," Vanden Houten said. "We see limited upside for single-family housing starts until more of that supply is sold."
Last week, government data showed that housing starts plunged in May to their lowest level since 2020, driven by a sharp decline in multi-family construction. A separate report by the National Association of Realtors showed that pending home sales increased more than expected last month despite elevated mortgage rates.
