U.S. New Home Sales Fell for Second Straight Month in May -- Update
June 25 2019 - 12:27PM
Dow Jones News
By Eric Morath and Likhitha Butchireddygari
WASHINGTON -- Americans purchased fewer new homes in May, a sign
the housing sector remains on somewhat uneven footing.
Purchases of newly built single-family homes decreased 7.8% to a
seasonally adjusted annual rate of 626,000 in May, the Commerce
Department said Tuesday. It was the slowest pace of sales since
December.
Economists surveyed by The Wall Street Journal had expected a
sales pace of 683,000 homes in May.
The monthly decline was driven by an unusually large decrease in
sales in the West.
"Any time new home sales are up or down sharply because of one
region, there is good reason to suspect that the move is fluky,"
Stephen Stanley, chief economist at Amherst Pierpont Securities,
wrote in a note to clients. He said strong sales of previously
owned homes in May lessens any concern about the broader housing
market.
Sales data can be volatile and subject to revisions. The May
decrease came with a margin of error of plus or minus 14.7
percentage points. Sales in April were revised up modestly to a
679,000 pace, while March sales were revised down to 705,000.
More broadly, new-homes sales have bounced back from a slump
last summer and fall but remain below the postrecession high
touched in November 2017. Sales are about half what they were
during the peak of the housing bubble in 2005.
New-home sales are a relatively narrow slice of all U.S. home
sales -- about 90% of homes purchased in the U.S. are previously
owned. Sales of previously owned homes rose in May, increasing 2.5%
to a seasonally adjusted annual rate of 5.34 million, the National
Association of Realtors said last week.
The two markets moved in opposite directions last month.
Mounting concerns about the global economy have pushed down
borrowing costs, and that appears to be aiding the market for
previously owned homes. Mortgage rates are down more than a
percentage point from late last year, according to Freddie Mac.
That helps make properties more affordable for buyers who finance
their purchases.
Low unemployment and rising wages are putting more households in
a position to buy, somewhat insulating the broader real-estate
sector from a global slowdown.
Tuesday's report showed the number of new homes for sale in May
would last 6.4 months at the recent pace. That is up from 5.6
months a year earlier. The median sales price of a new home in May
was $308,000, down from $316,700 a year earlier. But lower prices
and more supply didn't stoke better demand last month.
While sales fell sharply in the Northeast and West, they rose in
the South to the highest level in a decade. That is a positive sign
because the South is the largest region for new-home sales.
Write to Eric Morath at eric.morath@wsj.com
(END) Dow Jones Newswires
June 25, 2019 12:12 ET (16:12 GMT)
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