Sales of single-family homes dropped to their lowest level in six months this May, as lacking inventory and prolonged high rates showed little mercy.
New sales of single-family homes came in at a seasonally adjusted rate of 619,000, according to estimates from the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) for May 2024, released Wednesday. This is 11.3% below April’s revised rate of 698,000, and 16.5% below the May 2023 estimate of 741,000.
Builder sentiment fell to the lowest level since December 2023 in June, while single-family housing permits and starts posted monthly declines in May.
“Buyers seemed to have reached an inflection point in May, where even incentives from builders are no longer enough to overcome the challenge of rising mortgage rates,” First American Deputy Chief Economist Odeta Kushi pointed out. “Mortgage rates drifted above seven-percent in June, contributing to pessimism among buyers and builders alike. While the new-home market has remained a relative bright spot in the housing market due to builders’ ability to offer incentives and bring buyers off the sidelines, they are not immune to the impact of higher rates.”
The median sales price of new houses sold this May was $417,400, down just 0.9% from a year ago, but 9% lower than the 2022 peak. While the average sales price was $520,000, the seasonally‐adjusted estimate of new houses for sale at the end of May was 481,000. That represents a supply of 9.3 months at the current sales rate.
“The housing market remains structurally undersupplied and there are plenty of potential buyers waiting on the sidelines, as long as the payment-to-paycheck calculation pencils out,” Kushi said.
