New home sales for May came in at 342k, significantly below the 360k consensus. In addition, the April figures were revised down. Annual sales rate in April was lowered from 352k to 344k. May's sales were still below April's downwardly revised figures. Today's results, combined with yesterday's existing home sales, indicate that the housing market may not have hit the bottom yet.
Besides the overall miss, another figure that caught our attention was month's for sale. This number increased to 11.5, from 10.8 in the prior month. We view this as another indication of weak demand in the housing market.
The only positive number that we saw was a slight decrease in the month's supply, going to 10.2, from 10.4 in April (then again, April's month's supply was revised up to 10.4 from 10.1). However, as mentioned before, this figure remains significantly above what we have seen on average during other recessions. Month's supply was around 8.1 in prior recessions. The overall historical average is 6.1.
The housing market remains weak. With inflation possibly around the corner, this market could take another hit. We will see what the Fed will have to say about inflation later today.