Sales of new single-family houses in May 2014 were at a seasonally adjusted annual rate of 504,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 18.6 percent (±17.3%) above the revised April rate of 425,000 and is 16.9 percent (±19.6%)* above the May 2013 estimate of 431,000.
The median sales price of new houses sold in May 2014 was $282,000; the average sales price was $319,200. The seasonally adjusted estimate of new houses for sale at the end of May was 189,000. This represents a supply of 4.5 months at the current sales rate.
That’s a pretty strong performance, but needs to be kept in perspective.
504,000 annualized sales (arrived at by seasonalizing and annualizing actual sales of 49,000) is only about two-thirds of the 750,000 to 800,000 considered to constitute a healthy market.
In other words, a true housing recovery needs to be on track to get us to that “healthy” point over the next 12 months or so. It would be nice to think that it’s happening, and there’s always the chance that it is. But it’s hard to see how.
If the current level of sales continues, the existing stock of new homes will be sold out in less than four months (189K divided by 49K), and all kinds of new homes currently under construction will have to come online, and quickly. But there were only 343,000 homes (seasonally adjusted) under construction in May, virtually the same as the 339,000 seen in December. Not seasonally adjusted, there were 346,000 homes under construction at the end of May vs. 319,000 in December.
I’d like to be wrong, but May’s nice number looks in the worst case like a one-off or in the best case like the new-home market’s new, permanent, unacceptable peak.