This morning’s May report on New Home Sales from the Census Bureau fell 11.3% from the previous month. Additionally, the median price of a new home fell fractionally and is down 9% from its peak in October 2022. Prices have fluctuated within a 5% range for the last year and are still well above their pre-pandemic levels.
Most importantly, Months’ Supply of New Homes for Sale jumped almost 15%, continuing its rise. Homes are on the market for a median of 9.3 months at current inventory levels, up from 8.1 months the previous month – a level that has been seen in some of the worst housing recessions of the last 50 years.
The housing market is clearly starting to come back to earth. How long it will take to normalize or how swift its fall is a major unknown. If new home sales data continues to worsen and existing home supply increases further, prices will inevitably come down. We will continue to watch the housing market closely along with our Housing [Bubble] Bellwether Barometer for mounting evidence of a housing market plunge, which would have major effects on the broader economy.