New home sales dropped 5.9% last month to a seasonally adjusted annual rate of 769,000, the lowest since May 2020
The sale of new US single-family homes dropped to their lowest level in a year in May due to high prices.
New home sales dropped 5.9% last month to a seasonally adjusted annual rate of 769,000, the lowest since May 2020. Significantly, the median new home price in May increased 18.1% from a year ago to $374,400.
Industry observers have cited expensive raw materials, including framing, as the reason for rise in house prices.
According to the US Department of Commerce, the sale of homes also declined in April.
In the early days of the pandemic, a number of Americans left the cities in search of more spacious homes. They sought more living space for their home offices as well as online education. This migration from the city resulted in home sales during the pandemic, which increased rapidly.
New home sales and existing home sales suggest that home buying activity is past its peak, said Chris Lupky, chief economist at FWD BONDS in New York. I don’t know what will happen when the stay-at-home order shifts to returning to the office, Reuters said.
Observers pointed out that the decline in home sales suggests a easing of demand.
Overall, mortgage applications for home purchases declined this year.
Home purchase declines in May was mostly in the southern United States, where sales dropped 14.5%. At the same time, home sales rose in the northeast and west, but remained unchanged in the Midwest.
Mark Vitner, Senior Economist at Wells Fargo in Charlotte, North Carolina, said: In recent weeks, especially in some of the most popular housing markets in the South and Mountain West, some builders have reported low traffic for potential buyers, Reuters reported.
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