The housing market appears to be shaking off the shock of higher mortgage rates.
Driving the news: The number of new home sales rose for the third month in a row in May, up 12.2% from April — and up 20% over last year, per government data out Tuesday.
- A separate report from Case-Shiller showed home prices also rose for the third straight month in April.
The big picture: "If I were trying to make a case that the decline in home prices that began in June 2022 had definitively ended in January 2023, April's data would bolster my argument," Craig Lazzara, managing director at S&P DJI, said in a press release.
State of play: Demand for newly built houses is soaring for at least two reasons.
- There aren't a lot of existing homes on the market — a big reason home prices are bouncing back overall (as we've discussed).
- Homebuilders are offering mortgage buydowns and cutting prices — the median new home sale price in May was $416,300, down 7.6% from last year.
The bottom line: "Demand appears to be shifting towards and boosting sales of new homes," Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a note.
