In May, US new home sales showed a remarkable rebound, rising to the highest level since early 2010. US new home sales rebounded by 7.6% M/M in May to a total level of 369 000, while the previous figure was downwardly revised. The consensus was looking for only a slight rebound, by 1.0% M/M to 347 000. The breakdown shows however big deviations across regions with a strong rebound in the Northeast (36.7% M/M) and South (12.7% M/M), while new home sales dropped in the Midwest (-10.6% M/M) and West (-3.6% M/M).
The total number of new homes for sale rose slightly, from 144 000 to 145 000 but remains near record low levels, while months’ supply fell from 5.0 to 4.7. Both mean and median prices dropped slightly compared with the previous month.
The new home sales data show big month-on-month volatility, but overall the trend is encouraging. Inventory levels are however near record lows, which is a hurdle for new home sales to improve further. The inventory of existing homes, which often sell at a cheaper price, needs to be reduced first before we can expect a sustained recovery in new home sales.