New home sales rose more than 16 percent in May
Sales of new homes in the U.S. rose more than 16 percent in May as states began to peel back restrictions imposed to slow the spread of COVID-19, according to data released Tuesday by the Census Bureau.
Adjusting for seasonal fluctuations, roughly 676,000 new single-family homes were sold in May, according to the Census Bureau, a 16.6-percent increase from April. New home sales plunged 5.2 percent between March and April this year as the coronavirus pandemic spread through the U.S.
Economists attribute the sharp jump in new home sales to steep decline in interest rates since the start of the pandemic. Anecdotal reports of financially secure city-dwellers moving to the suburbs to limit COVID-19 exposure may also factor into the housing market recovery.
“The housing market has held on relatively well during this service sector recession as would-be buyers have taken advantage of incredibly low mortgage rates, despite only viewing the homes online in many cases,” wrote Yelena Maleyev, an associate economist at Grant Thornton, in a Tuesday research note.
The sharp rebound in new homes sales is the latest glimpse into the economic rebound that began in May as states began easing coronavirus-related restrictions. The return of 2.7 million workers from temporary layoffs helped U.S. payrolls add a net 2.5 million employees in May, according to Labor Department data. Retail sales also surged more than 17 percent last month as stores reopened.
Even so, the early recovery from the coronavirus-driven recession has largely benefited those least affected by the dual crises and left out those who’ve suffered the most.
May’s hiring rebound brought the national unemployment rate down to 13.3 percent, but the Black unemployment rate ticked higher from 16.6 percent in April to 16.8 percent last month.
And while those with enough money to buy a home have taken advantage of low interest rates, millions of renters who’ve lost their jobs are facing eviction once national and local moratoriums expire this summer.
Maleyev also noted that the resurgence of coronavirus cases across the South and Sun Belt — two of the fastest-growing regions of the country — could also stunt the housing market.
“The recent surge in COVID-19 cases is not expected to result in widespread lockdowns but will put a damper on activity during the summer,” she wrote.
“The housing market could heat up in the autumn but if the pace of infections continues to grow, the biggest housing market in the country, the South, could suffer significant losses and exacerbate the downturn in GDP in 2020,” she wrote.