New home sales increased at their quickest rate in more than two years in May.
Sales of new singe-family homes for the month of May, according to new data from the Census Bureau, rose 19.8 percent year-over-year to a two-year high.
The 369,000 seasonally-adjusted annual rate was also 7.6 percent above April’s rate of 343,000.
Other data from the Census Bureau included:
- Median sale price for new houses was $234,500 in May.
- Average sale price for the same month was $237,900.
- With 145,000 new homes for sale at the end of May, the supply is just 4.7 months.
Garrison Benson, the CEO/president of Garrison Partners, said new home sales have been “outstanding,” and the big uptick in demand has been primarily a product of supply and demand. There have been no new developments since 2006, he said, and as a result, the dwindling inventories have increased demand for the few available units on the market.
Interest rates, Benson continued, have also been strong motivators, especially with 30-year FRM at 3.66 percent by Freddie Mac’s latest average.
Beyond market conditions, though, Benson said the big tipping point in new home sales will be condo conversions, and when associations resume converting apartments to condos. He anticipates that will begin in the third quarter of 2013 and continue through 2019, as first-time homebuyers and retiring baby boomers (“first-timers and last timers,” as he called them) enter the condo market.