There has been a significant rise in US new home sales last month in May. To talk of the numbers, it would be seen that there has been a huge rise in home sales with a percentage of 10.7%.
This is according to a seasonally adjusted rate of 696,000 in May and this comes from a sharply revised 629,000 in the last month, which is April, according to a report by the Commerce Department last week.
Several analysts of the Wall Street Journal had predicted that new home sales were likely to come in the month of May and that the numbers would be somewhat around 587,000 in May itself, from an estimate of 591,000. Additionally, it has to be noted that the year-over-year new home sales have been down by 5.9%.
Things to note
In the month of May, there was a fall in the median sales price of new homes that were being sold in May which had fallen to $449,000 which was from a record high of $454,000. Along with this, the supply of new homes for sale had also fallen to 7.2% between the months of April and May, which equated to a 7.7-month supply.
The sales had also fallen to a great margin in the Northeast, which was by 51.1%, and this was followed by the Midwest, which had seen an 18.3% drop in new home sales. On the other hand, the South and the West had seen an increase in sales, which were at 12.8% and 39.3% respectively.
All of this amid a slowdown?
Even though the numbers above show promising figures, but even when there are higher sales numbers, the housing sector is one that is going through a slowdown. All of this when the mortgage rates have been soaring past 5.8% for a 30-year fixed-rate mortgage, according to a report by Freddie Mac. This also explains why inventory remains tight with the number of homes in the market.
What are experts saying?
Experts in this field have had mixed reactions and believe that the data can be volatile from month to month, and is definitely subject to revision. They also believe that the trend has been weakening sharply till now in Q2. Some believe the data to be wild and say that the margin of error in the May print is huge.
They further said that home sales are most likely to be constrained in the upcoming days and that will be determined by higher prices and the increases in mortgage rates, as Fed works on normalizing its monetary policies.
Others hold the view that the housing market has been rolling over and the sales are likely to fall to a great extent in the upcoming months. It's interesting to note that the Dow Jones Industrial Average and the S&P 500 were quite higher in their early trading the last Friday. Additionally, the yield on the 10-year Treasury note had inched down to 3.08%.