New home sales surged in May, rising to their highest level since May of 2008. In all, purchases of such residences rebounded further from a winter-induced slump at the start of the year, and easily outdistanced the expected increase for the latest month, which was a much more modest figure.
Specifically, sales jumped by 18.6% in May, the biggest one-month gain since January of 1992, to an annualized rate of 504,000 homes. That was dramatically above the expected gain to 440,000 properties on an annualized basis. The data was supplied by the U.S. Commerce Department.
Today's report followed a survey issued yesterday by the National Association of Realtors, a private trade organization, on sales of existing homes. That is a much larger and more stable housing category than new home sales. That sector, too, experienced an increase, albeit a lesser one proportionately.
As to the new home sales component, this gain shows clearly that the housing recovery is still going on, notwithstanding higher prices, low inventories, and affordability questions.
Breaking the report down, we find that sales rose in all four regions of the country, led by a 54.5% jump in the Northeast, the smallest of the four housing markets nationally. Sales also soared in the West, climbing by 34%. The gain in the South, the largest region, was a formidable 14.2%. In fact, aggregate sales might well have been even stronger had there been a greater supply of unsold homes on the market. However, inventories remained low, with the total supply of such properties dropping to just 4.5 months. In April, the level of such homes had been 5.3 months.
All told, the median price of a new home in May came to $282,000. Home prices have been climbing steadily, and that is one reason for the affordability issues, at present.
Looked at as a whole, this was a strong report and one that gives us confidence in the vigor and sustainability of the long-running business expansion going forward this year.
At the time of this article's posting, the author did not have positions in any of the companies mentioned.