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06-23-20 | Economic News

New Home Sales Up, Existing Sales Down

New Sales Are Better than Last Year by 1.9%

The median home price has increased 2.3% over the past year but on a three-month basis, the median price grew 5.9%.

After a decrease of 25% during the prior three months, new home sales in May increased 16.6%, which outdistanced the market's expectations. At the same time, existing home sales dropped by 9.7%.

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Year-to-date through May, new sales are higher than last year by 1.9% but inventory for new homes is down 6.6%. The regions that showed the best performance in May were the South and the West.

The Wells Fargo Economics Group credited the difference between new and existing sales on the fewer restrictions on showings of new homes, lower interest rates and improvement in the job market. In their monthly statement they said, "Housing remains a bright spot, which seems inconsistent with high unemployment. Job losses have been centered in the hospitality and retail sectors, however, where workers tend to be younger and more likely to be renters rather than home buyers."

For existing homes, sales of single-family homes fell 9.4% and sales of condos and co-ops decreased 12.8%.

"We expect existing home sales to rebound in June," wrote the economics group. "Low mortgage rates, a buoyant stock market and the big bounce back in May nonfarm payrolls all suggest that home buying should be less impacted than many other types of economic activity. Past experience suggest that a nesting effect kicks in during times of national trauma, resulting in increased home sales and more spending on home improvements. The early evidence supports this notion. Mortgage applications for the purchase of a home have risen for the past ten weeks and are now at their highest level in 11 years."

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