May 2023 Residential Sales, Inventory and Prices

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Sales of new single-family houses in May 2023 were at a seasonally adjusted annual rate (SAAR) of 763,000 units (667,000 expected). This is 12.2% (±12.8%)* above the revised April rate of 680,000 (originally 683,000 units) and 20.0% (±15.5%) above the May 2022 SAAR of 636,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was +25.9%. For longer-term perspectives, NSA sales were 45.1% below the “housing bubble” peak but 39.6% above the long-term, pre-2000 average.

The median sales price of new houses sold in May was $416,300 (+3.5%, or $13,900). The average sales price was $487,300 (-1.7%, or -$8,300). Homes priced at/above $750,000 comprised 11.0% of sales, down from the year-earlier 15.5%.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

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As mentioned in our post about housing permits, starts and completions in May, single-unit completions rose by 38,000 units (+3.9%). Sales rose (83,000 units, or +12.2%), resulting in inventory for sale shrinking in both absolute (-4,000 units) and months-of-inventory (-0.6 month) terms. 

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Existing home sales broke off their earlier decline, rising (+0.2% or 10,000 units) in May to a SAAR of 4.30 million units (4.25 million expected). Inventory of existing homes for sale expanded in both absolute (+40,000 units) and months-of-inventory (+0.1 month) terms. Because resales advanced at a slower pace than new-home sales, the share of total sales comprised of new homes increased to 15.1%. The median price of previously owned homes sold in May rose to $396,100 (+2.6% or $10,200).

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Housing affordability dipped (-1.7 index points) as the median price of existing homes for sale in April rose by $13,800 (+3.6% MoM; -2.1 YoY) to $393,300. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices was unchanged at a not-seasonally adjusted monthly change of +1.3% (-0.2% YoY).

“The U.S. housing market continued to strengthen in April 2023,” said Craig Lazzara, Managing Director at S&P DJI. “Home prices peaked in June 2022, declined until January 2023, and then began to recover. The National Composite rose by 1.3% in April (repeating March’s performance), and now stands only 2.4% below its June 2022 peak. Our 10- and 20-City Composites both gained 1.7% in April.

“The ongoing recovery in home prices is broadly based. Before seasonal adjustments, prices rose in all 20 cities in April (as they had also done in March). Seasonally adjusted data showed rising prices in 19 cities in April (versus 14 in March).

“On a trailing 12-month basis, the National Composite is 0.2% below its April 2022 level, with the 10-and 20-City Composites also negative on a year-over-year basis, but regional differences continue to be striking. Miami’s 5.2% gain made it the best-performing city for the ninth consecutive month, but in April Chicago toddled into second place with a 4.1% gain. Atlanta (+3.5%) and Charlotte (+3.4%) round out the top four. The next three positions are occupied by New York, Cleveland, and then perennial medalist Tampa, indicating a remarkable diversity among the top performers. At the other end of the scale, however, the worst eight performers are all in the Mountain or Pacific time zones, with Seattle (-12.4%) and San Francisco (-11.1%) at the bottom. The Southeast (+3.6%) continues as the country’s strongest region, while the West (-6.9%) remains the weakest.

“If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April’s data would bolster my argument. Whether we see further support for that view in coming months will depend on how well the market navigates the challenges posed by current mortgage rates and the continuing possibility of economic weakness.”

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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.