Sales of new homes were down 2.1% from April to May but up when observing a more appropriate 3-month average. New home sales dropped to a record low in February but rose 16% above that level by April and have since leveled off at about a 320,000 home sales per year. This level still remains well below the more ‘normal’ levels of near one million sales per year. Monthly regional sales rates were up in the Midwest and South and down in the Northeast and West, but on a 3-month average, all regions were up or even.
The inventory of new homes for sale recorded another all-time record low (records go back to 1963) at 166,000 homes or a 6.2 months’ supply. The May low breaks the record low established in April, which broke the record in March, which was the lowest since April 1967. The number of new homes for sale that are completed and ready to occupy is at an even lower level of 64,000 or an average of 2 new homes per county.
Median new home prices dropped 3.4% from May 2010 as the share of homes sold over $300,000 continued to fall, which is a likely effect from a larger share of first time home buyers and fewer repeat buyers in the market.
The second half of 2011 new home sales rate should improve slowly as the economy improves, employment grows and prospective home buyers regain confidence in their economic and employment future.