Sales of new single-family homes in May 2006 were at a seasonally adjusted annual rate of about 1.23 million, the U.S. Census Bureau and the Department of Housing and Urban Development reported this week, which is a 4.6 percent rise over the revised April rate but is 5.9 percent below the May 2005 estimate.
The median sales price of new houses sold in May 2006 was $235,300, which is down 4.3 percent since April but up 3.1 percent since May 2005. The average sales price, meanwhile, was $294,300 in May 2006, which is down 2.6 percent since April and up 2.4 percent since May.
Since January, the median sales price fell 3.9 percent and the average sales price fell 2.2 percent.
The seasonally adjusted estimate of new houses for sale at the end of May was 556,000. This represents a supply of 5.5 months at the current sales rate. A supply greater than six months is typically considered to be indicative of a buyer’s market while a supply less than six months indicates a seller’s market.
Regionally, the seasonally adjusted annual rate of new-home sales dropped 36.3 percent in the Northeast, 20.8 percent in the Midwest, 12.7 percent in the West and increased 8.4 percent in the South from May 2005 to May 2006, according to the report. From April 2006 to May 2006, the rate of new-home sales dropped 7.9 percent in the Northeast while gaining 6 percent in the South, 5.3 percent in the West and 2.7 percent in the Midwest.
“The May sales number seems a bit too good to be true, especially in view of the wide confidence intervals around these statistics,” stated David Seiders, chief economist for the National Association of Home Builders trade group.
“Furthermore, the latest results of NAHB’s builder surveys indicate weaker demand for homes coinciding with higher interest rates, deepening affordability issues and a retreat of investors/speculators from the market. We don’t think the cooling process for housing is over yet, and we wouldn’t be surprised to see a downward revision to May’s numbers as well as some decline in coming months.”
Statistics are estimated from sample surveys and are subject to sampling variability as well as non-sampling error including bias and variance from response, non-reporting, and under-coverage, the agencies reported.
Changes in seasonally adjusted statistics often show irregular movement. It takes six months to establish a trend for new houses sold. Preliminary new-home sales figures are subject to revision due to the survey methodology and definitions used. The survey is primarily based on a sample of houses selected from building permits. Since a “sale” is defined as a deposit taken or sales agreement signed, this can occur prior to a permit being issued. An estimate of these prior sales is included in the sales figure. On average, the preliminary seasonally adjusted estimate of total sales is revised about 3 percent, according to the announcement.
Changes in sales price data reflect changes in the distribution of houses by region, size, and other factors, as well as changes in the prices of houses with identical characteristics, the agencies reported.