U.S. May New Home Sales - Second straight decline suggests trend is weakening
May new home sales with a 7.3% decline to 580k have extended a 5.7% decline in April. Housing indicators are mixed overall but new home sales appear to have broken out of what had been a fairly stable range to the downside.
Trend in new home sales had been mostly between 650k and 700k over the last three years. The latest level is still slightly above January’s 576k though that could be blamed on weather and a correction from a strong 748k in November 2025. The latest two declines do suggest a weakening in trend.
Housing signals are mixed with pending home sales having shown some signs of improvement in recent months and the weekly MBA house purchase index fairly stable, but the NAHB homebuilders’’ index has been weak, even if May saw a modest bounce which was corrected by a weaker June.
Regionally the May data was mixed with gains in the Northeast and Midwest but declines in the South and West. A steep decline in the West looks somewhat erratic. Looking ahead the risk of Fed tightening is likely to keep mortgage rates firm and allow little upside to new home sales.
Price data was somewhat firmer on the month, the median up by 2.0%, surprising after a 6.0% rise in April, while the average surged by 7.8% to more than fully erase two straight declines. On a yr/yr basis the median is flat after a 0.7% April rise, while the average is up by 5.0% after a 2.5% decline in April. The underlying price picture is probably fairly close to flat.
