May’s new-home sales data reveals a shrinking affordable market

New single-family home sales decreased by 7.3 percent in May, according to data released by the U.S. Census Bureau and the Department of Housing and Urban Development. This decline, however, is overshadowed by a significant reduction in the availability of affordable new homes entering the market. The share of new homes sold that were priced below $300,000 dropped to 11 percent in May, down from 14 percent in April and 18 percent in May 2023. Conversely, the share of new homes sold above $500,000 increased to 47 percent in May, up from 44 percent in April and 39 percent in May of the previous year. This trend indicates a growing affordability crisis, as fewer entry-level options are available for potential buyers, pushing them towards higher price points or out of the market entirely. The median sales price of new homes sold in May was $430,700, a slight increase from $427,200 in April, while the average sales price rose to $505,500 from $499,500 in April. The supply of new homes also saw a shift, with the number of homes for sale at the end of May increasing to 472,000, a 4.3-month supply at the current sales pace, up from 4.2 months in April. However, the composition of this supply reflects the ongoing affordability challenge, with a larger proportion of higher-priced homes available.