WASHINGTON — New single-family home sales rose by 6.7% to a 689,000 annual rate in May, led solely by a sharp increase in sales in the large South region, data released by the Commerce Department Monday showed.
New home sales pace was above the 665,000 rate expected, based on an MNI survey of economists, but followed downward revisions to the previous two months. As a result, market participants are less likely to react, especially with one region driving the entire gain.
The sales pace remains well above its year ago level, up 14.0% unadjusted from May 2017.
New homes sales in April were revised down to a 646,000 pace from the 662,000 previously announced rate. The March pace was revised down very slightly to 671,000 from 672,000.
When those revisions are incorporated, the second quarter sales pace averaged 668,000, up from 656,000 in the first quarter.
When broken down regionally, the rise in May headline sales was due to a 17.9% rebound in the South region to a 409,000 level, the highest since July 2007. These were offset by declines in the Northeast (-10.0%) and West (-8.7%), and a flat reading in the Midwest.
The supply of new homes for sale rose by 1.0% in the month to a level of 299,000. The current level of supply is 10.3% higher than a year earlier, suggesting that supply is adequate to meet demand.
Based on the movements in sales and supply in May, the months' supply slipped to 5.2 months from the April months' supply of 5.5 months. The May months' supply was down from the May 2017 level of 5.4 months.
Still, supply of new homes remains fairly high relative to sales, as opposed to the very tight supply of existing homes available for sale.
The median sales price fell by 1.7% to $313,000 from $318,500 in April. The May median price stands 3.3% below the $323,600 level in May 2017, suggesting that new home prices show less forward momentum than the large gains in the median sales price for existing homes.
