June 23 (UPI) -- The National Association of Home Builders said Tuesday that May sales of newly constructed homes were up 12.7 percent over a year ago and 16.6 percent higher than April.
The figures -- highlighting a seasonally adjusted annual rate of 676,000 units in May -- come from the latest data provided by the Department of Urban Development and the Census Bureau, NAHB officials said, suggesting the increases indicate the market is emerging from the coronavirus pandemic.
"The May sales numbers are in line with rising builder sentiment," NAHB Chairman Chuck Fowke said in a statement. "With home building considered an essential business, this solid sales report is another indicator that housing is leading the economic recovery."
The association said one of the biggest takeaways from the statistics came in the increase of homes not yet under construction. A new home sale happens when a sales contract is signed or a deposit is accepted. A home can be in any stage of construction at that point.
"Sales of homes not yet under construction are rising given capacity limitations in the building industry," Robert Dietz, chief economist at NAHB said. "Due to labor and land constraints, homebuilders were already producing too few single-family homes given potential demand. As housing demand has picked up in recent weeks, builders have shifted sales to homes not yet under construction -- a 20 percent year-over-year gain for such sales."
The rapid change may have caught some builders off guard as coronavirus restrictions may have piqued an increasing market for homes in the suburbs and buyers are now preferring new over existing houses.
"The rapid improvement in sales of new homes may also reflect a change in consumer preferences, with buyers showing a newfound penchant for a cleaner, never-lived-in homes -- although the long-term durability of that trend remains to be seen," Matthew Speakman, an economist at Zillow, said.