May New Home Sales

Updated 24-Jun-09 10:22 ET

Highlights

New home sales in May were at a seasonally adjusted annual rate of 342,000. That was down -0.6% from the April level, which was revised lower to 344,000 from an originally reported 352,000. It was also down -32.8% from May 2008.
The May result came in below the consensus estimate of 360,000 and followed form with the existing home sales number earlier in the week, which was also below the consensus estimate.
By region, sales were up 28.6% in the Northeast, up 18.6% in the Midwest, up 1.3% in the West and down -8.5% in the South. At the current sales pace, the inventory of new homes for sale slipped to 10.2 months from 10.4 months. That compares to 10.7 months in the year-ago period and reflects the slowness of the recovery process despite falling prices and falling mortgage rates.
Median prices in May actually picked up to $221,600 from $212,600 in April, yet they are still -3.4% below the May 2008 level.

This isn't a great report, but relatively speaking it isn't a horrendous report either as the level of sales in May was pretty stable compared to the average of 344,000 for the 3-month period between February and April.
With new home sales accounting for just under 7% of total home sales, the market didn't show a lot of interest in the May number despite the disappointing headline print.

New homes sales are in worse shape than existing home sales. New homes suffer from a large surfeit of unsold homes and the fact that new homes are frequently bought by first time buyers. That market is in difficult shape due to credit issues. Existing home sales are often purchased by more credit-worthy borrowers and can be more broadly in areas where demand is more steady. The outlook for new home sales will remain poor for some time.

Category	MAY	APR	MAR	FEB	JAN
Total Sales	342K	344K	335K	354K	329K
Inventory (months)	10.2	10.4	11.2	11.1	12.4
Median Price Y/Y	-3.4%	-13.7%	-11.9%	-14.5%	-10.2%