New-Home Sales Rise in May as Prices Hit Record Level -- Update
June 23 2017 - 01:04PM
Dow Jones News
By Sarah Chaney and Jeffrey Sparshott
New-home sales rose in May and prices hit a record level, more
evidence of a housing market characterized by strong demand and
tight inventories.
Purchases of new, single-family homes -- a narrow slice of all
U.S. home sales -- rose 2.9% to a seasonally adjusted annual rate
of 610,000 in May, the Commerce Department said Friday.
From a year earlier, new-home sales rose 8.9% in May and so far
this year have climbed 12.2%, indicating the market for new homes
appears to be picking up.
"The name of the housing market game over the past few years has
been low supply, not low demand," said Ralph McLaughlin, chief
economist at Trulia. "As home sales continue to pick up, that's
further evidence that we have a supply problem, not a demand
problem."
The median sale price for a new home sold in May was $345,800,
the highest recorded for data dating back to 1963. The average sale
price also came in the highest on record at $406,400.
"It's going to be very hard to sustain price increases of any
large amount going forward because they are pushing against
people's ability to afford homes," said Brad Hunter, chief
economist at HomeAdvisor.
At the current sales pace, there was a 5.3 months' supply of new
homes on the market in May, a relatively low level.
"Ultimately this report is a disappointment for those looking to
builders to meaningfully help solve the pressing supply issues in
the market overall, especially for entry-level buyers," said Svenja
Gudell, chief economist at Zillow.
Earlier this week, the National Association of Realtors reported
sales of existing homes, which compose the bulk of the market, rose
1.1% in May to a seasonally adjusted annual rate of 5.62 million.
The median property remained on the market just 27 days in May, the
shortest time since the trade group began tracking the metric six
years ago.
"The pressure to close deals quickly, which has afflicted the
existing home sales market, is also seeping into the market for new
homes," Ms. Gudell said.
New homes that weren't started but already sold reached 208,000,
the highest level since May 2007.
Several factors are converging to help strengthen buyer demand.
The national unemployment rate in May was 4.3%, a 16-year low, and
the economy continued to expand and add jobs in the first half of
2017.
Still, the slow pace of new construction is constraining supply.
Housing starts declined for the third straight month in May, as
builders expressed concern about tight availability of lots and a
labor shortage.
Write to Sarah Chaney at sarah.chaney@wsj.com and Jeffrey
Sparshott at jeffrey.sparshott@wsj.com
(END) Dow Jones Newswires
June 23, 2017 12:49 ET (16:49 GMT)
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