Key Details:
- Today, the U.S. Census Bureau reported an 11.3% decline in new single-family home sales in May 2024.
- In addition, the months of supply increased from 8.1 months in April to 9.3 months in May.
The U.S. Census Bureau released May 2024 sales of new single-family homes, which fell to a seasonally adjusted annual rate of 619,000. This marks an 11.3% decrease from April’s revised rate of 698,000 and a 16.5% drop from May 2023’s estimate of 741,000.
This downward trend underscores the challenges currently facing the housing market, driven in part by fluctuating mortgage rates.
New Home Sales Trends: Price and Months’ Supply
In May, the median sales price for new houses sold was $417,400, while the average was $520,000. These figures reflect a slight decline in median prices, down 0.9% from the previous year.
In addition, data from the Census Bureau shows that the inventory of new houses for sale was estimated at 481,000 in May, translating to a supply of 9.3 months at the current sales rate. This is an increase from the 8.1 months of supply in April and the 6.9 months one year ago.
In some markets, builders have responded to the softened demand with strategic adjustments, offering incentives or discounts to attract buyers.
Home Builder Sentiment
Last week, the National Association of Home Builders (NAHB) reported a drop in builder confidence, with the Housing Market Index (HMI) falling to 43 in June, its lowest reading since December 2023. Chairman Carl Harris noted some of the challenges builders are currently facing:
“Persistently high mortgage rates are keeping many prospective buyers on the sidelines. Home builders are also dealing with higher rates for construction and development loans, chronic labor shortages and a dearth of buildable lots.”
As a result, 29% of builders cut prices in May to stimulate sales, with the average price reduction holding steady at 6%. Additionally, 61% of builders are offering sales incentives, such as rate buydowns, to make purchases more appealing to buyers, according to the HMI survey.
Of course, builder confidence varies across different regions:
- Northeast: 62
- Midwest: 47
- South: 46
- West: 41
These regional differences are critical for real estate professionals to consider when sharing data with clients.
Read the full HMI report here.
