Despite sliding interest rates, despite a strong economy, despite an increase in wages, despite…despite…despite…new home sales fell to a 5-month low in May, according to new data released by the Department of Housing and Urban Development and the US Census Bureau. New home sale in May 2019 declined -7.8% compared to April and -3.7% lower than new home sales in May 2018.
TIAA Bank’s executive vice president John Pataky said, “The material decline in 30-year mortgage rates was pushed back against some of the negative trends we’ve seen such as land and labor shortages. In the new home segment, it seems that not even lower rates could counteract the structural challenges. Unless there is a strong uptick in construction or a further drop in rates, the pattern of ‘two steps forward and one step back’ results we’ve seen in the new home market will carry on.
At the current sales rate, the supply of new home for sale stands at 6.4 months.
According to Zillow economist, Mathew Speakman, “The dip in May new home sales comes as a surprise. (Such discouraging results of new home sales) comes after a stretch of unexpectedly strong months to start the year…the fact that sales in some of those early months (of this year) were even higher than initially reported is an indication that many buyers stand ready to purchase what builders are putting up.”
Perhaps some of Speakman’s positive take on May’s disappointing new home sales report comes from there being a recent uptick in single-family permits.
