New single-family home sales dropped 1.6 percent from April to May to a seasonally adjusted annual rate of 915,000 units according to a report (PDF) jointly released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) on Tuesday morning. Sales were down from May 2006 by nearly 16 percent.
The monthly report also reveals that the median sales price of new homes sold in May 2007 was $236,100; the average sales price was $313,000. The seasonally adjusted estimate of the number of new homes for sale at the end of May was 536,000.
In addition, April's new-home sales numbers have been revised from 981,000 units to 930,000, which, according to one economist, softens the blow of May's numbers.
"A huge revision in April's numbers made the decline look very modest," Mark Vitner, senior economist for Wachovia, told BUILDER Online. "May is consistent with what we have been thinking all along - that sales are finding a bottom." Vitner added that April's spike was due to a drop in interest rates and discounts offered by builders in an effort to move product.
The joint-agency release follows a Monday announcement by the National Association of Realtors (NAR) concerning existing-home sales, which fell to their lowest level since June 2003. Bernard Markstein, senior economist and director of forecasting with the National Association of Home Builders (NAHB), says May's new-home sales numbers are consistent with the recent existing-home sales report. Markstein also echoes sentiments similar to Vitner concerning the new-home sales.
"Overall, the rate of decline is slowing," Markstein told BUILDER Online. "We're not quite at the bottom but it looks like we are approaching the bottom of the market. In the next couple of months, we will see the bottom and then we will begin to work off this excess inventory."
"We are expecting in the second half of the year for things to more or less stabilize," Markstein added.
Vitner is predicting that new-home sales will continue to hover at the 900,000 unit level for the remainder of 2007 and going into 2008. And although the market is not ideal for builders, Markstein suggests that consumers take advantage of high inventories while they still can.
"This is a buyers' market," commented Markstein, "and it is great for buyers to be out there. And in six months to a year, all the incentives builders are offering are going to go away."