EmailNew home sales fell 2.1% in May, falling from 326,000 in April to 319,000. The Briefing.com consensus expected new home sales to fall to 305,000.
Even though new homes sales declined during the month, the lack of a sizable drop was definitely a positive surprise.
The existing home sector continues to be plagued by excess supply and falling prices. These problems were expected to pass through to weaker sales levels in the new home sector.
Yet, the price spread between new and median homes widened modestly from $55,900 in April to $56,100. This suggests that prices for both new and existing homes have fallen by so much that, at their current level, they may no longer be the main deciding factor when choosing between a new and existing home.
Still, if prices for existing homes reaccelerate downward as many economists expect, the price spread between new and existing home will again become a prominent factor and drive potential homebuyers away from new homes and into existing ones.
The supply of new homes fell from 6.3 months in April to 6.2 months in May. Supply is now at its lowest level since April 2010. This level should continue to deteriorate as the construction of new homes remains on a downward slide.
