May Sees a 2.2% Increase in New Home Sales
According to a June 23rd report from Forbes magazine, newly constructed single-family homes saw a 2.2% boost in sales in May, up from April. Sales are also 19.5% higher than they were at the same time last year, the report stated.
In May of 2015, new single-family home sales reached 546,000, an annual seasonally adjusted figure from the Commerce Department. This was a big jump up from the previous year’s number of 457,000 sales in May of 2014. This data includes the number of newly constructed homes that are involved in a committed finalized sale every month. It is viewed by economists as an indicator of economic momentum and a signal of future purchases of appliances and home furnishings.
A new home sold in May has a median price of $282,800, which is less than the average sale price of $337,000. (A non-distressed home has a median price of around $136,000.) By the end of May, inventory was at 206,000, which equates to a supply of more than four months at the current sale pace. A deficit in inventory is a continuous problem in the housing market, with both new homes and previously-owned homes effected. Traditionally, economists say that there needs to be at least a six-month supply to balance supply demand. However, Bill McBride, a blogger from Calculated Risk, says that a supply of less than six months is normal as of late.
A separate report from the National Association of Realtors stated sales of pre-owned homes in May were at their highest in almost six years. New home groundbreakings, however, decreased by 11.1% in May, as compared to April. But builder confidence in the June market stands at a level of 59, in which any reading above 50 indicates a positive prediction in conditions.
This could mean good news for retirees, who account for 13% of the population and 27% of all new home sales.