Buyers hoping to move into a brand-spanking-new home may need to act fast.
More newly constructed homes were completed in May—but fewer abodes are in the pipeline, according to the seasonally adjusted numbers in the latest residential sales report jointly released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Seasonally adjusted numbers have been smoothed out over a 12-month period to compensate for seasonal fluctuations.
First, the good news: About 1.164 million sorely needed new homes were completed in May. That’s 5.6% more than in April, and a whopping 14.6% more than May 2016.
The number of new single-family abodes, the kind of homes that usually have a backyard, were up 4.9% from April and 12.8% from the previous May.
About 12% more condo and apartment buildings with five or more units were completed in May over April. The number of these new multi-family buildings was 18.4% higher than May 2016.
The construction “prevents the number of homes on the market from falling too rapidly,” says realtor.com®’s senior economist, Joseph Kirchner. “Unfortunately, it is not enough to stem the steady decline of homes on the market, a drop that results in increasing prices and, in some markets, bidding wars.”
Plus, those new homes were significantly more expensive than existing ones—by about 25.6%. (Existing homes have been previously lived in.)
The new abodes cost a median $309,200 in April, according to the most recent U.S. Census Bureau and U.S. Department of Housing and Urban Development data. Meanwhile, the median existing-home price hit $244,800 in April, according to the most recent data from the National Association of Realtors.
But despite the housing shortage, builders received only about 4.9% fewer permits to put up new homes in May compared with April. The number of permits issued, 1.168 million, were also about 0.8% under what they were in May 2016.
“Housing shortages look to intensify and may well turn into a housing emergency if the discrepancy between housing demand and housing supply widens further,” Lawrence Yun, chief economist of the National Association of Realtors, said in a statement. “The falling housing starts and housing permits in May are befuddling, given the lack of homes for sale and the quick pace of selling newly constructed homes.”
This is expected to drive up home prices and rents, he said.
Permits for single-family homes fell 1.9% from April. But they were up 6% from the same month a year earlier.
Condo and apartment building permits dropped the furthest—10.1% from April and 13.1% from the prior May. These were buildings with five or more units.
Meanwhile, housing starts, which are the number of residences on which construction began, were down 5.5% from April and dipped 2.4% from May 2016.