New Home Sales Decrease to 619,000 Annual Rate in May

Median New Home Price is Down 9% from the Peak

The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 619 thousand, however the three previous months were revised up sharply.

Sales of new single‐family houses in May 2024 were at a seasonally adjusted annual rate of 619,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.3 percent below the revised April rate of 698,000 and is 16.5 percent below the May 2023 estimate of 741,000.
emphasis added

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

New home sales were close to pre-pandemic levels. The second graph shows New Home Months of Supply.

The months of supply increased in May to 9.3 months from 8.1 months in April. The all-time record high was 12.2 months of supply in January 2009. The all-time record low was 3.3 months in August 2020. This is well above the top of the normal range (about 4 to 6 months of supply is normal).

“The seasonally‐adjusted estimate of new houses for sale at the end of May was 481,000.  This represents a supply of 9.3 months at the current sales rate.”

On inventory, according to the Census Bureau:

"A house is considered for sale when a permit to build has been issued in permit-issuing places or work has begun on the footings or foundation in nonpermit areas and a sales contract has not been signed nor a deposit accepted."

Starting in 1973 the Census Bureau broke this down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973.

The inventory of completed homes for sale (red) - at 99 thousand - is triple the record low of 31 thousand in February 2022. This is the most since 2009, but still close to the normal level of completed homes for sale.

The inventory of homes under construction (blue) at 278 thousand is very high but is about 13% below the cycle peak in July 2022. The inventory of homes not started is at 104 thousand - this is the all-time high.

The fourth graph shows new home sales for each month, Not Seasonally Adjusted (NSA), for a few selected periods. Black is the maximum sales per month during the bubble (2005) and light gray is the minimum sales during the bust (2008 - 2011). The most recent six years are shown (2019 through 2024).

The following content is for paid subscribers only. Thanks to all paid subscribers!