New home sales increased over a minimum of several years as sales of existing homes and especially condos plummeted. What gives?

If the pandemic changed where Americans want to live (dense urban centers or suburbs), it will be one of the most far-reaching developments.

By Wolf Richter for WOLF STREET.

Sales of new single-family homes increased 12.7% in May, compared to May last year, at a seasonally adjusted annual sales rate of 676,000 homes, according to the Commerce Department this morning. Home builders have reported interest in new Homes, as some homebuyers sought to avoid buying someone else’s home due to pandemic problems, such as social distancing requirements and fear of spreading or contracting the virus. The pandemic-induced “move to the suburbs” is also said to contribute to interest in new homes.

This increase in new home sales occurred even as existing home sales fell 26.6% in May, the steepest decline since 2008, to 3.91 million homes, seasonally adjusted annual rate, the lowest since Depth of housing decline in October 2010, with home sales. -24.8% and sales of condominiums -41%.

Then there is the next review. In new home sales data, next month’s reviews tend to be large, so today, April’s new home sales declined from 623,000 reported a month ago to 580,000 today, the worst April since 2016. So May sales will have to be looked at again in revised form within a month.

On the longer horizon, the massive boom in multi-family homes, including condo and apartment towers that have mushroomed in America’s urban centers, has replaced a significant portion of demand for single-family homes.

Single-family home sales in May 2020 were on par with what they had been in the 1970s. Peak sales occurred in July 2005, with 1.39 million homes sold, seasonally adjusted annual rate. In the long run, this has not exactly been a booming business, in terms of the number of units sold:

Average price below where it was in May 2017.

The median price for new homes has been in the same range since 2016, and the peak occurred in late 2017. In May, the median price increased 1.6% year-over-year to $ 317,900, below where it was been in May 2017 ($ 323,600). The first time the average price exceeded that level was in April 2016:

Extensive inventory of spec homes

The supply of unsold new homes decreased to 318,000 seasonally adjusted, for an offer of 5.6 months at the current rate of sales. The supply of special housing for four months has historically been more than sufficient:

If this much-discussed pandemic-induced mass exodus from condominium towers and other high-density multifamily housing in urban centers to single-family homes in suburbs or even distant smaller cities, powered by work from home, becomes a real trend. con It remains to be seen the staying power.

There are certainly some people who made this move recently. Some of this has been going on for years as people start families and want to live in a house. And the opposite has been happening for years as empty nests and others move from a house to a condo or apartment tower to take in the panoramic views, be in the midst of urban life, and walk to work.

If the pandemic changes these dynamics in a visible and long-term way, not only for a month or two, it will be one of the most far-reaching developments, with major implications far beyond the real estate market.

First signs of a very slow disorder. Read… Home sales have plummeted the most since 2008, condos -41%. First fall in prices from April to May in the season of sales of normally red hot springs

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