WASHINGTON, June 23 (Reuters) - Sales of new U.S. single-family homes fell to a one-year low in May, likely hindered by expensive raw materials such as lumber, which are boosting the prices of newly constructed homes.
New home sales dropped 5.9% to a seasonally adjusted annual rate of 769,000 units last month, the lowest level since May 2020, the Commerce Department said on Wednesday.
April’s sales pace was revised down to 817,000 units from the previously reported 863,000 units. Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, to be at a rate of 870,000 units in May. Sales tumbled 14.5% in the populous South, but rose in the Northeast and West. They were unchanged in the Midwest.
New home sales are drawn from a sample of houses selected from building permits and tend to be volatile on a month-to-month basis. Sales rose 9.2% on a year-on-year basis in May.
The market for new homes is being supported by a dearth of previously owned houses. The single-family housing market benefited from a migration from cities as millions of Americans sought more spacious accommodations for home offices and schooling during the COVID-19 pandemic.
But there are signs that tailwind is weakening. At least 150 million Americans have been fully vaccinated against the coronavirus, allowing the economy to begin reopening and companies to recall workers back to offices. A report from the National Association of Realtors on Tuesday showed sales of previously owned homes fell for a fourth straight month in May.
Builders have failed to take advantage of the inventory squeeze because of shortages of lumber and other raw materials, leading house prices to surge beyond the reach of some first-time buyers. The median new house price jumped 18.1% from a year earlier to $374,400 in May.
Sales were concentrated in the $200,000-$749,000 price range. Sales below the $200,000 price bracket, the sought-after segment of the market, accounted for only 2% of transactions last month.
There were 330,000 new homes on the market last month, up from 315,000 in April. At May’s sales pace it would take 5.1 months to clear the supply of houses on the market, up from 4.6 months in April. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
About 76% of homes sold last month were either under construction or yet to be built. (Reporting by Lucia Mutikani Editing by Paul Simao)