In May, the housing market witnessed a surge in new home sales, reaching their highest level since February 2022. According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes experienced a notable 12.2% increase to a seasonally adjusted annual rate of 763,000.

The National Association of Home Builders (NAHB) analyzed the market updates, highlighting the impact of limited existing home inventory on the rising demand for new homes. Alicia Huey, Chairman of NAHB, emphasized, "Demand for new homes is strengthening because of a lack of existing home inventory." She further noted the positive trend of increased sales in the $200,000 to $300,000 price range, reflecting a significant shift from previous years.

 

NAHB Chief Economist Robert Dietz explained that the scarcity of resale homes, with just a three months' supply, is driving the demand for newly built properties. He emphasized that, historically, new home inventory accounts for 10% to 15% of total inventory, but in May, it constituted a remarkable 31%. Dietz also highlighted the contrasting figures between the decline in resales by 20% from the previous year and the 20% increase in new home sales.

Despite the tight supply conditions in existing homes, the current building pace has led to a more balanced inventory, with a 6.7 months' supply. The median sale price for new homes in May was $416,300, representing a 7.6% decrease compared to the previous year.

Regionally, new home sales in the Northeast and the South experienced modest gains, while the Midwest and the West faced challenges, with sales declining by 2.5% and 20.7%, respectively.
The housing market continues to grapple with inventory shortages, but the surge in new home sales provides optimism for prospective buyers and the construction industry alike.

https://www.nahb.org/news-and-economics/press-releases/2023/06/new-home-sales-jump-in-may