US home sales driven higher by soaring US south

US home sales driven higher by soaring US south
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Washington: Sales of new US homes in the southern United States drove US home sales to a seven-month high in May, government data showed Monday.

But sales fell or stagnated in the rest of the country for the second month in a row, while prices and inventories also cooled, according to the Commerce Department.

The figures suggested that — the blip in the south notwithstanding — demand could be moderating as mortgage rates rise and prices remain elevated, a trend that could weigh on GDP growth in the second quarter.

Total sales of newly constructed single-family houses rose 6.7 percent to an annual rate of 689,000 units, seasonally adjusted, which was the highest level since November and overshot economists’ expectations for a result of 666,000.

This was 14.1 percent higher than the level recorded in May of last year.

All of the growth was in the south, which jumped a stunning 17.9 percent to an annual rate of 409,000 units, the highest level since July of 2007, before the global financial crisis, and the largest one-month increase in three and a half years.

Elsewhere, for the second month in a row, sales fell in the west and northeast and held steady in the Midwest.

All the results were well within broad margins of error and are subject to significant revisions.

The inventory of new homes for sale rose one percent to 299,000. This represented a supply of 5.2 months at the current sales pace, a 5.5 percent decline from April’s level, the biggest monthly dip in supply in five months.

The median sales price fell 1.7 percent to $313,000 and average prices fell an even faster 6.6 percent to $368,500, suggesting lower sales activity at the luxury end of the market.

Analysts say short supplies, due to rising costs and tight labor markets, amid strong demand have driven up prices beyond what is affordable for many would-be homeowners.

Meanwhile certain changes to real estate deductions in December’s sweeping tax cuts, as well as rising interest rates, are also making home ownership less attractive for some.