Today, the Census will release the US New Home Sales (NHS) for May. According to the Bloomberg consensus, NHS should decrease by 1.2% MoM to 675K SAAR (v 683K prior). Several proxies suggest that NHS will surprise upward, as buyers faced lack of existing homes for sale. This article was updated from the original post of Christophe Barraud.
Several Proxies Suggest New Home Sales Could Rise In May
According to the May 2023 data from the Mortgage Bankers Association (MBA) Builder Application Survey (BAS), there has been a significant increase in mortgage applications for new home purchases compared to the previous year. The applications have seen a rise of 16.6 percent. Additionally, when compared to April 2023, there has been an 8 percent increase in applications. It’s worth noting that these figures do not account for the usual seasonal patterns.
Based on data from the BAS, the MBA estimates that new single-family home sales, which are considered a leading indicator of the U.S. Census Bureau’s New Residential Sales report, were running at a seasonally adjusted annual rate of 755,000 units in May 2023.
Other housing surveys also point to resilient NHS in May as noted by Rick Palacios Jr, Director of Research at John Burns Research and Consulting. In addition, NAHB survey showed that current sales conditions rose five points to 56 in May (above the expansion threshold of 50).
A Spike of New Home Sales Can By Explained By The Lack of Existing Homes For Sale
In May, new home sales probably received a boost due to the scarcity of available homes for resale. The number of US homes for sale has reached record low levels in May, according to real estate brokerage Redfin Corp. More recently, the NAR also reported the number of homes for sale fell 6.1% from a year earlier to 1.08 million units in May. That’s the lowest inventory level for any May in data back to 1999. In this context, buyers likely sought new construction to get a larger choice.
About the Author:
Christophe Barraud is Chief Economist and Strategist at Market Securities. He has been awarded by Bloomberg the title of Top Forecaster of the U.S. Economy (from 2012 to 2020 and in 2022), Eurozone Economy (from 2015 to 2019 and in 2022) and Chinese Economy (from 2017 to 2020). He also won the latest Forecaster of the Year contest organized by MarketWatch in 2020. Since 2021, he has been Adjunct Lecturer at ESCP in the MSc Finance, which has been ranked first worldwide in the 2023 Financial Times Masters in Finance ranking.