Sales of new single-family homes jumped 18.6% in May to reach a seasonally adjusted annual rate of 504,000, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
The increase shatters the revised April rate of 425,000 units per annum and is 16.9% above the May 2013 estimate of 431,000.
The median sales price of a new home sold in May was $282,000; the average sales price was $319,200.
The seasonally adjusted estimate of new houses for sale at the end of May was 189,000 – a 4.5-month supply at the current sales rate.
The sudden increase – due mainly to pent-up consumer demand for new homes stemming from a lack of inventory – brings the sales rate for new homes to approximately the same level seen in May 2008 – about four months before the Great Recession kicked into high gear.
‘These numbers are in line with our recent builder surveys, which indicate that more consumers are getting off the fence and coming back into the marketplace,’ says Kevin Kelly, chairman of the National Association of Home Builders (NAHB) in a statement.
David Crowe, chief economist for NAHB, says the jump ‘is a welcome sign after a slow start to 2014.’
‘As job creation continues, we can expect further release of pent-up demand and continued gradual growth in the housing recovery,’ Crowe adds.
Regionally, new home sales were up 54.5% in the Northeast, 34% in the West, 14.2% in the South and 1.4% in the Midwest.
According to NAHB, the increase in new home sales was the biggest monthly jump since January 1992.
In May, the U.S. Census Bureau reported that April new home sales had increased 6.4%, compared to March.
Earlier this week, the National Association of Realtors (NAR) released data showing that existing-home sales – including single-family homes, townhouses, condominiums and co-ops – rose 4.9% to a seasonally adjusted annual rate of 4.89 million in May compared to an upwardly revised 4.66 million in April.
This, however, is still 5% below the 5.15 million-unit level seen in May 2013. The 4.9% month-over-month gain in May was the highest monthly rise since August 2011 (5.5%), NAR reports.
Meanwhile, home price appreciation is slowing, inventory is increasing, mortgage interest rates are more or less holding steady, the rate of unemployment is dropping and consumer attitudes towards the economy are improving, setting up a possible comeback for the housing market in the second half of this year.