New home sales unexpectedly fell in May as prices climb to record highs.
Sales of new single-family homes fell 5.9% in May to a seasonally adjusted annual rate of 769,000, according to the Census Bureau and Department of Housing and Urban Development. Last month’s reading was revised down by 46,000 to 817,000. Analysts surveyed by Refinitiv were expecting an increase to 870,000 in May.
New home sales account for about 10% of the housing market.
New home construction has in recent months been slowed supply chain challenges which have resulted in higher commodity costs, including lumber. A surge in prices earlier this year added $36,000 to the cost of building an average sized new home.
Surging input costs and the flight out of city centers during the pandemic have worsened the supply shortage although the report showed inventory increased last month to 330,000 units, the highest since July 2019.
As supply increased so too did prices. The median sales price rose to a record $374,400.
A separate report released Tuesday by the National Association of Realtors showed existing home sales also declined in May amid record price growth.
The number of contracts closed last month fell 0.9% from April to a seasonally adjusted annual rate of 5.8 million. The decline in contracts came as the median existing-home price grew at a record 23.6% annual rate to $350,300. Prices have posted 111 straight months of year-over-year gains since March 2011.