By Yara Abi Farraj
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U.S. single-family home sales at six-month low in May as supply hits over 16-year high

U.S. new home sales saw an 11.3 percent decline to 619,000 units last month, the lowest level since November 2023
U.S. single-family home sales at six-month low in May as supply hits over 16-year high
The department also revised April sales up to 698,000 units, a nine-month high, from the previous 634,000 units

U.S. single-family home sales declined to a six-month low in May as supply hit its highest in more than 16 years. The rise in mortgage rates has significantly impacted demand, signaling a slump in the housing market’s recovery.

Upon the upward revision of April’s data to show sales rising instead of falling, the Department of Commerce said that the impact of April’s largest decline in sales in more than 1.5 years was now softer.

Rate hikes hit U.S. housing market the hardest

The U.S. housing market experienced the hardest hit after the Federal Reserve started its interest rate hike cycle in March 2022. However, it started recovering in the third quarter of 2023 due to a shortage of previously owned homes, which boosted the demand for home construction. However, the rise in mortgage rates has also impacted sales of previously owned homes and homebuilding.

U.S. new home sales saw an 11.3 percent decline to 619,000 units last month, the lowest level since November 2023, according to the Department of Commerce’s Census Bureau. The department also revised April sales up to 698,000 units, a nine-month high, from the previous 634,000 units.

The Census Bureau counts new U.S. home sales at the signing of a contract, making them a leading indicator of the housing market’s performance. However, this indicator can be volatile on a monthly basis. Therefore, the bureau reveals that new U.S. home sales declined 16.5 percent year-on-year in May.

Residential investment recorded double-digit growth in the first quarter, contributing to the economy’s 1.3 percent growth rate.

Read: China’s new home prices rise 0.25 percent in May, maintain 9-month positive trend

New home prices continue to rise

U.S. home sales saw a 43.8 percent decline in the Northeast and a 4.5 percent decline in the West in May. In the South, sales declined 12 percent while they saw an 8.6 percent decline in the Midwest.

The data also reveals that the median new U.S. house price declined 0.9 percent annually in May to $417,400 with around 50 percent of new home sales being less than $399,000.

A survey from the National Association of Homebuilders last week revealed that the share of builders cutting prices to bolster sales in June was the highest in five months. Hence, builders are constructing smaller homes to try and fit home buyers’ budgets.

Despite efforts to decrease home prices, they are still steadily rising. In a report, the Federal Housing Finance Agency recently revealed that U.S. single-family home prices rose 6.3 percent annually in April.

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