New Homes Sales Dip 2.1 Percent In May
The Commerce Department reported on Thursday that new home sales fell 2.1 percent last month as activity slowed way down in the Northeast. The agency said that new home sales fell to a seasonally adjusted annual pace of just 319,000 in May, ahead of the 310,000 rate analysts taking part in a recent MarketWatch survey had projected. April’s figures were also revised upward from a pace of 324,000 to 326,000.
The Northeast contributed heavily to the national decline in new home sales, with a drop of almost 28 percent, offsetting a 2.5 percent increase in the nation’s largest region, the South. The Midwest saw an unchanged pace of new home sales, while the West experienced a 3.5 percent decline.
New home sales are a traditionally volatile category, with a plus / minus margin of 10.7 percent, but May’s data fits within the range of 278,000 to 331,000 over the past twelve months. Sales have trended modestly higher over the last few months, with sales climbing about 8 percent between the first and second quarters.
Despite the upward trend, the new home sales market is still very much depressed. As the nation entered its worst recession since the 1930s in December 2007, new home sales were at a pace of 641,000, and during the housing boom in July 2005, the pace was 1.39 million. New home sales are struggling because of a variety of factors, including continued weakness in the nation’s job market, a high percentage of underwater homeowners, and a continued wave of inexpensive distressed properties with which new homes must compete.