New home sales fell 7.8% in May to an adjusted rate of 626,000, but are 4% higher than they were in May 2018, according to data by the Department of Housing and Urban Development and the U.S. Census Bureau.
"The report shows growth in sales in the $200,000-300,000 price range, which indicates middle-class demand for housing is being supported by low rates and solid employment,” said Greg Ugalde, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Torrington, Connecticut.
Robert Dietz, Chief Economist at the NAHB, said the May numbers were “a bit surprising” given lower mortgages in recent months.
“Based on these conditions, we expect June new home sales figures will show a rebound,” Dietz said.
The report, published by the NHAB, stated the inventory of new homes for sale in May was 333,000, which is a 6.4 months’ supply. The average price for those homes was $308,200, and the home sold for an average of $316,700.
New home sales were 7.5% higher in the south and 3.4% higher in the west. Both the northeast and the midwest saw declines, 13.3% and 3.2%, respectively.
The National Association of Realtors (NAR) added positive news on the housing market, revealing that pending home sales increased 1.1% in May, and three of four regions saw contract activity grow.
Lawrence Yun, Chief Economist at the NAR, attributed growth in pending sales to historically low mortgage rates.
“Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates,” Yun said.
Realtor.com’s Chief Economist Danielle Hale mortgage rates have also helped boost affordability.
“Looking forward, as long as the June drop in consumer confidence doesn't spook buyers we could see home sales pick-up in the months ahead prompted by low mortgage rates,” Hale said.