New-home sales post a May surprise with an 11% monthly gain!
Friday’s new residential sales report from the U.S. Census Bureau brought some surprisingly good news as new single-family home sales jumped 10.7% month over month to a seasonally adjusted annual rate of 696,000 units in May.
The gain was very much an unexpected development, with economists surveyed by Reuters projecting that new-home sales would fall to a 588,000-unit pace. Year over year, sales dropped by 5.9%, but April’s sales pace also saw a bump, receiving an upward revision to 629,000 units from the previously reported 591,000.
Wells Fargo economist Mark Vitner said that the bank’s researchers went against the grain in predicting the now-realized sales increase.
“We had forecast an upside surprise this month — with our point estimate at 703,000 units, or 113,000 units above consensus,” he said. “We rarely deviate from the consensus by that much but saw something unique in the data. There was a surge in completions of single-family homes in May reported in the housing-starts data earlier this month, which we believe was driven by buyers racing in to lock in mortgage rates before rates rose even higher.
“Sales of new homes under construction accounted for the largest share of May's increase, although sales of homes where construction has not yet started and sales of completed homes also rose last month.” By Arnie Aurellano,
Website content editor, Scotsman Guide