The week has started out on a rather positive note for the U.S. economy, with data issued earlier this morning showing that sales of new homes had perked up nicely last month, rising by almost 8%, to a seasonally adjusted annual rate of 369,000 for the month. In April, the revised sales figure had been 343,000 homes, just a tad below the initially estimated rate of 343,900 homes. Expectations had been for a sales result of 346,000 homes for the month of May.
All told, this was the highest monthly sales total in more than two years. As with other housing metrics, however, the figures remain dramatically below the peak cyclical sales levels reached in the middle of the prior decade. At that time, total sales had approached the 1.4 million unit level on an annual basis. Nevertheless, the trend is positive and we appear to have passed the trough of the long down cycle.
The latest result, while being the highest monthly rate since April of 2010, was also some 20% ahead of the May result a year ago. Meanwhile, the median price of a new single-family home was $234,500 last month. The average price was $273,900. (The marked deviation in these two numbers, obviously reflects the very high price of some luxury homes in the overall mix.) The seasonally adjusted level of new homes for sale last month was 145,000. That represents a supply of just 4.7 months at the current sales rate. A level of some six months is considered to be healthy. So, clearly, there is little overhang on the market at this time, and assuming that we start to get some better news on the employment front, housing could pick up notably in the not-too-distant future.
Meanwhile, this was a materially better result than for sales of existing homes that were reported last week, and which showed that such volume had edged slightly lower last month, falling by 1.5% on a sequential-month basis. As with this report, the increase over the year-earlier total was sizable, attesting to the marked change in one year on this front. Also, encouraging was the drop in the level of distressed homes from the total mix. A year ago, such sales had accounted for 31% of the total; now, the figure is just 25%.
On the whole, this report was quite positive, and we would look for some further, albeit uneven, improvement in the months to come
At the time of this article's writing, the author did not have positions in any of the company's mentioned.