Contracts for new home sales expanded by 2.9 per cent in May to a 610,000 seasonally adjusted annual rate, according to estimates from the joint data release of HUD and the US Census Bureau Friday. The report also noted a strong upward revision for the April rate of sales, increasing from a 569,000 annual pace to 593,000. The growth in sales continues along a positive trend for the market, which is sup- ported by solid job growth, improving household formations, continuing favorable housing affordability conditions and tight existing home inventory.
Elsewhere, according to the most recent release of the Survey of Market Absorption (SOMA), produced by the US Census Bureau in collaboration with the US Department of Housing and Urban Development Wednesday, completions of nonsubsidized, unfurnished, rental apartments in buildings with 5 or more units totaled to 73,300 in the fourth quarter of 2016, about 9 per cent higher than completions in the fourth quarter of 2015 (67,300).
The three-month moving average of new home sales (616,000) is currently near a post-recession high (619,000). Despite some volatility in the month-to-month sales figures, May marks the third consecutive month that the three-month moving average has topped a 600,000 rate. New home sales through May are running 12.2 per cent higher than this time in 2016, exactly in line with the National Association of Home Builders forecast.
US HOUSE INVENTORY
Inventory growth continued in May. After hovering near 240,000 for most of 2016, inventory has now risen to 268,000 homes. The current months’ supply stands at a healthier 5.3. Given tight existing inventory, more new homes are required to meet housing demand.
Median new home sales price (price of the home in the middle of the distribution) rose to US$345,800. Average home price jumped to US$406,400. The data suggest these gains may be due to a shift in the geographic mix of new home sales in May, with a larger share of sales in high cost areas like the West.
Regionally, there was strong sales growth on a monthly basis in the West (13 per cent) and the South (6 per cent). Declines were reported in the Northeast (11 per cent) and the Midwest (26 per cent).
The SOMA report also contains data on the number of subsidized or tax credit based apartments completed. Although total multifamily completions in buildings with 5 or more units are up (86,000 in Q4 2016 compared to 79,100 in Q4 2015), the share that is subsidized or tax credit based continues to trend lower. In the fourth quarter of 2016, these units represented about 5% of completions (4,500), down from 9% in the fourth quarter of 2015 (7,200)
US EXISTING HOME SALES
Existing-home sales rebounded in May following a notable decline in April, and low inventory levels helped propel the median sales price to a new high while pushing down the median days a home is on the market to a new low, according to the National Association of Realtors®. All major regions except for the Midwest saw an increase in sales last month.