Despite the economic turmoil caused by the coronavirus pandemic, it appears that some parts of the housing market are beginning to show signs of a rebound after all. Although previously owned home sales fell by 9.7% in May, new home sales on the other hand showed a rebound that many analysts were not anticipating.
According to recent data released by the US Commerce Department, new home sales increased by 16.6% in May, which translates to a seasonally adjusted annual rate of 676,000 homes sold. Given that new home sales are accounted for as soon as a contract is signed, they become a significant indicator of the housing market’s well being.
Furthermore, new home inventories began to decline in May, while housing prices increase by 1.7% on a year over year basis, which translates to an increase from an average new home price of $303,000 to $317,900. Economists polled by Reuters predicted that new home sales would only rebound by approximately 2.9% accompanied by a U-shaped recovery. However, with new home sales accounting for nearly 10% of all housing sales, the sudden rebound in May suggests the US economy is on a path to recovery.
Information for this briefing was found via Reuters, Financial Post, and US Commerce Department. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.