More Bad News: New Home Sales Plummet 32.7% in May
On the heels of reports that existing home sales declined for the first time in three months, the Commerce Department's Census Bureau and the Department of Housing and Urban Development (HUD) reported Wednesday that the seasonally adjusted annual rate of new home sales dropped 32.7% in May. According to the monthly report (download here), sales of new single-family houses in May 2010 were at a seasonally adjusted annual rate of 300,000. That's down 32.7% from the revised April rate of 446,000. The April estimate was downwardly revised from an original rate of 504,000. The latest numbers are also down 18.3% from the same month a year ago, when the rate was 367,000. Paul Dales, US economist at Toronto-based Capital Economics said the latest report "officially marks the start of the double-dip in housing activity" that he's been projecting since earlier this year. "The fall back in May is the result of sales having been brought forward from future months and is not a disaster in itself," Dales wrote. "New home sales will probably rebound a touch in June and July." "We fear that the appetite to buy a home has disappeared alongside the tax credit," he added. The median sales price of new houses sold in May 2010 was $200,900 and the average price was $263,400. In addition, the report said the seasonally adjusted estimate of new houses for sale at the end of May was 213,000, an 8.5-month supply of homes at the current sales rate. Regionally, sales of new homes dropped the most in the West. There, the seasonally adjusted annual rate of 51,000 new home sales was down 53.2% from the downwardly revised April rate of 109,000. Year-over-year, new home sales are down 43.3%, when the rate was 90,000. In the Northeast, new home sales were at a rate of 28,000, down 33.3% from the upwardly revised April rate of 42,000. However, Northeastern home sales are up 12% from May 2009's rate of 25,000. The South experienced a 25.4% drop in the sales rate month-over-month — 170,000 in May, compared to the downwardly revised April rate of 228,000. Sales are also down 16.7% from a year ago, when the rate was 204,000. In the Midwest, the sales rate of 51,000 is down 23.9% from the downwardly revised estimate of 67,000. Sales are up 6.3% from a year ago, when the rate was 48,000. Tuesday, the National Association of Realtors (NAR) reported that the annual rate of existing home sales declined 2.2% from April to May. The report drew mixed reaction from industry analysts who called to question the impact that the homebuyer tax credit is having on the market and further fueling speculation of a double-dip in housing. "We don't think that a housing double-dip will be followed by a double-dip in the wider economy," Dales wrote . "Nonetheless, the overall economic recovery will still run out of steam next year." Write to Austin Kilgore.