New home sales increased 10.7% in May to a seasonally adjusted annual rate of 696,000, the U.S. Census Bureau reported.
The National Association of Home Builders credited the May boost, which followed four consecutive months of new home sales declines, to some buyers rushing into the market in advance of the Federal Reserve’s June interest rate hike. Compared with May 2021, new home sales declined 5.9%.
“Though new home sales registered a solid increase in May, we expect sales to decline in June following the Fed’s action to significantly raise interest rates in an effort to cool the economy and ease inflation,” NAHB Chairman Jerry Konter said in a statement. “High construction costs and rising mortgage rates are pricing many buyers out of the market. Only 10% of new homes were priced below $300,000 in May, compared to 23% a year ago.”
Regionally, compared with April, new home sales plunged 51.1% in the Northeast and 18.3% in the Midwest. New home sales in the South and West increased 12.8% and 39.3%, respectively.
The median new home sales price in May was $449,000, and the average sales price was $511,400.
The estimate of new houses for sale at the end of May was 444,000, a supply of 7.7 months at the current sales pace.
