Sales of new
single-family houses in May 2021 were at a seasonally adjusted annual rate (SAAR)
of 769,000 units (881,000 expected).
This is 5.9% (±18.6%)* below the revised April rate of 817,000, but 9.2% (±28.7%)*
above the May 2020 SAAR of 704,000 units; the not-seasonally adjusted (NSA)
year-over-year comparison (shown in the table above) was +7.8%. For longer-term
perspectives, NSA sales were 44.6% below the “housing bubble” peak but 32.0%
above the long-term, pre-2000 average.
The
median sales price of new houses sold in May rose ($9,100 or +2.5% MoM) to a new
record-high $374,400; meanwhile, the average sales price rose to (also a new
record-high) $430,600 ($9,700 or +2.3% MoM). Starter homes (defined here as those
priced below $200,000) comprised 2.0% of the total sold, down from the
year-earlier 12.5%; prior to the Great Recession starter homes represented as
much as 61% of total new-home sales. Homes priced below $150,000 were less than
0.7% of sales, down from 1.6% a year earlier.
* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.
As mentioned in our post about housing permits, starts and completions in May, single-unit completions fell by +26,000 units (-2.6%). Because sales fell by an greater amount (48,000 units; -5.9%), inventory for sale rose in absolute (+15,000 units) and months-of-inventory (+0.5 month) terms.
Existing home sales retreated further in May (50,000 units or -0.9%), to a SAAR of 5.80 million units (5.715 million expected). Inventory of existing homes for sale expanded in absolute (80,000 units) and months-of-inventory (0.1 month) terms. Because resales fell on a smaller proportional basis than new-home sales, the share of total sales comprised of new homes slipped to 11.7%. The median price of previously owned homes sold in May advanced to a record $350,300 ($9,700 or +2.8% MoM).
Housing
affordability slumped by 19.2 percentage points as the median price of
existing homes for sale in April rose by $14,700 (+4.4% MoM; +19.9 YoY), to $346,200.
Concurrently, Standard
& Poor’s reported that the U.S. National Index in the S&P Case-Shiller
CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change
of +2.1% (+14.6% YoY).
“Housing
prices accelerated their surge in April 2021,” said Craig
Lazzara, Managing Director and Global Head of Index Investment Strategy at
S&P DJI. “The National Composite Index marked its eleventh consecutive
month of accelerating prices with a 14.6% gain from year-ago levels, up from
13.3% in March. This acceleration is also reflected in the 10- and 20-City
Composites (up 14.4% and 14.9%, respectively). The market’s strength is broadly-based:
all 20 cities rose, and all 20 gained more in the 12 months ended in April than
they had gained in the 12 months ended in March.
“April’s
performance was truly extraordinary. The 14.6% gain in the National Composite
is literally the highest reading in more than 30 years of S&P CoreLogic
Case-Shiller data. Housing prices in all 20 cities rose; price gains in all 20
cities accelerated; price gains in all 20 cities were in the top quartile of
historical performance. In 15 cities, price gains were in top decile. Five
cities -- Charlotte, Cleveland, Dallas, Denver, and Seattle -- joined the
National Composite in recording their all-time highest 12-month gains.
“We
have previously suggested that the strength in the U.S. housing market is being
driven in part by reaction to the COVID pandemic, as potential buyers move from
urban apartments to suburban homes. April’s data continue to be consistent with
this hypothesis. This demand surge may simply represent an acceleration of
purchases that would have occurred anyway over the next several years.
Alternatively, there may have been a secular change in locational preferences,
leading to a permanent shift in the demand curve for housing. More time and
data will be required to analyze this question.
“Phoenix’s 22.3% increase led all cities for the 23rd consecutive month, with San Diego (+21.6%) and Seattle (+20.2%) providing strong competition. Although prices were strongest in the West (+17.2%) and Southwest (+16.9%), every region logged double-digit gains.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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