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Wednesday, June 23, 2021

A few Comments on May New Home Sales

by Calculated Risk on 6/23/2021 11:21:00 AM

New home sales for May were reported at 769,000 on a seasonally adjusted annual rate basis (SAAR). Sales for the previous three months were revised down significantly.

This was well below consensus expectations for May, but still the highest sales rate for May since 2007.

However, sales were in line with home builder comments about "limiting sales" in April and May mostly due to high material costs.

Still, sales have been strong for the last year.  Clearly low mortgages rates, low existing home supply, and favorable demographics have boosted sales.  A surging stock market has probably helped new home sales too.

Earlier: New Home Sales Decrease to 769,000 Annual Rate in May.

New Home Sales 2018 2019Click on graph for larger image.

This graph shows new home sales for 2020 and 2021 by month (Seasonally Adjusted Annual Rate).

The year-over-year comparisons were easy in the first half of 2021 - especially in March and April.

However, sales will likely be down year-over-year in the 2nd half of 2021 (maybe June) - since the selling season was delayed in 2020.

And on inventory: note that completed inventory (3rd graph in previous post) is near record lows, but inventory under construction is closer to normal.

New Home Sales, Months by Stage of ConstructionThis graph shows the months of supply by stage of construction.

The inventory of completed homes for sale was at 36 thousand in May, just above the record low of 33 thousand in April 2021. That is about 0.6 months of completed supply (just above the record low).

The inventory of new homes under construction, and not started, is at 4.6 months - a normal level.