NEW! CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Wednesday, June 23, 2021

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

by Calculated Risk on 6/23/2021 10:12:00 AM

The Census Bureau reports New Home Sales in May were at a seasonally adjusted annual rate (SAAR) of 769 thousand.

The previous three months were revised down sharply, combined.

Sales of new single‐family houses in May 2021 were at a seasonally adjusted annual rate of 769,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.9 percent below the revised April rate of 817,000, but is 9.2 percent above the May 2020 estimate of 704,000.
emphasis added
New Home SalesClick on graph for larger image.

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

This was the highest sales rate for May since 2007.

The second graph shows New Home Months of Supply.

New Home Sales, Months of SupplyThe months of supply increased in May to 5.1 months from 4.6 months in April.

The all time record high was 12.1 months of supply in January 2009. The all time record low was 3.5 months, most recently in October 2020.

This is in the normal range (about 4 to 6 months supply is normal).
"The seasonally‐adjusted estimate of new houses for sale at the end of May was 330,000. This represents a supply of 5.1 months at the current sales rate."
New Home Sales, InventoryOn 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 is just above the record low, but the combined total of completed and under construction is close to normal.

New Home Sales, NSAThe last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In May 2021 (red column), 69 thousand new homes were sold (NSA). Last year, 64 thousand homes were sold in May.

The all time high for May was 120 thousand in 2005, and the all time low for May was 26 thousand in 2010.

This was well below expectations, and sales in the three previous months were revised down sharply, combined. I'll have more later today.