New single-family home sales reached the highest pace in six years in May.
According to estimates from the Census Bureau and the Department of Housing and Urban Development, new home sales were at a seasonally adjusted annual rate of 504,000 in May, a gain of 18.6% over a slightly downwardly revised April (425,000). The May 2014 rate of sales is the highest since May of 2008 and is a significant increase from the winter low point for sales in March (410,000).
The May estimates represent a return to the improving trend that has characterized the recent recovery for the single-family sector. NAHB is forecasting that single-family new home sales will total 515,000 in 2014, a nearly 20% year-over-year gain.
New home inventories were flat in May, holding at the 189,000 revised level for April. Months-supply fell to 4.5 given the increase in the sales rate. Total inventory levels have remained in the 183,000 to 190,000 range since September 2013.
Regionally, the pace of sales in the South increased by 14% for the month, while the West was up 34%. Gains in the South may reflect payback for prior weather-related declines, while gains in the West could be due to improving job market and economic trends. The Midwest was effectively unchanged (1.4% increase) from April but has now experienced two solid months after weaker sales figures during the wintry first quarter. Sales in the Northeast were up 54.5%. It is important to keep in mind, however, that the regional numbers have large confidence intervals around the estimates.
The graph above presents monthly sales totals by stage of construction. Over the last year and a half, there have been gains in sales not-started-construction and sales currently under construction. In May, there was a 50% monthly increase in sales of homes not yet begun construction, rising from 12,000 for the month to 18,000.