Sales of new single‐family homes declined last month as mortgage rates continued to remain elevated.

May sales came in at a seasonally adjusted annual rate of 619,000 homes, according to estimates released jointly on Wednesday by the U.S. Census Bureau and the Department of Housing and Urban Development.

That figure is 11.3% below the revised estimate of 698,000 houses for April and 16.5% below the May 2023 estimate of 741,000 homes.

Also Read: Home Listings Surge, Indicating A Healthier Housing Market

"Persistently high mortgage rates in May kept many prospective buyers on the sidelines," National Association of Home Builders Chairman Carl Harris said in a statement on Wednesday.

"However, significant unmet demand exists, and we expect mortgage rates to moderate in the coming months, which will bring more buyers into the market."

The interest rate on a 30-year fixed-rate mortgage is 6.875% on Wednesday, which is unchanged from yesterday, Fox Business reported. Meanwhile, the interest rate on a 15-year fixed-rate mortgage is 6.000%, which is also unchanged from yesterday. 

The Federal Reserve has kept its key interest rate between 5.25% and 5.50% as it waits for the rate of inflation to fall to 2% and expects to cut rates only once this year.

Housing Shortage Fuels Unmet Demand

New home inventory in the U.S. stood at 481,000 homes in May, representing a 9.3-month supply of new homes at the current sales rate, according to the federal housing data. But the combined inventory for new and existing single-family homes remains lean at a 4.4 months' supply, NAHB estimates showed.

The median sales price of new houses sold in May was $417,400, while the average sales price was $520,000, according to data from the Census Bureau and Department of Housing and Urban Development. A year ago, the median sales price was $421,200, while the average sales price came in at $495,800.

In April, the median sales price was $417,900 and the average sales price was $503,700.

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