New Home Sales and Median Prices Continue to Tumble

New home purchases fell more than expected in May, to 915k (consensus 924k). The MoM decline though was less than expected, at -1.6% MoM, because the surprisingly large gain from April was revised lower from +16.2% MoM to +12.5% MoM. Even with the downward revising to April's leap in sales, it was still the largest monthly gain since 1993. New home sales have fallen -16% versus a year ago.

Median home prices recovered slightly to decline only -.9% YoY. This compares to the shockingly large, though revised to be a smaller decline, of -9.5% YoY in April. Median house prices rose to $236k in May, from $233k in April, but are still significantly below the $258k in March. Shifting mixes of homes by regions can impact the median national home price, which can be volatile. In general though, homebuilders have been competing with existing home owners by reducing prices and/or increasing amenities and other incentives.

The months' supply of homes inventory only rose slightly, to 7.1 months, a decline of over a month versus the 8.3 months' supply peak set in March, as inventories fell more slowly than sales. New home starts slowed in May, as builders attempt to pare down excess inventories.

By region, only the Midwest saw an increase in new home sales (+31% MoM). All other regions of the country saw declines in May, versus April, sales levels. The Northeast fell -11% MoM, the South declined -7% MoM, and the West eased by -2% MoM.

New homes account for 15-20% of total home sales in most months. New home sales data is considered more timely than existing home sales, which are based on closings and lag original contracts by 1-2 months.

The housing market continues to deteriorate as rising interest rates, and tighter credit standards, reduce the supply of new buyers. Thirty year mortgage rates rose to an 11-month high of 6.75% in mid-June.