New home sales improved in May…with some significantly lower prices. The Census Bureau reported new home sales for May at a seasonally adjusted annual rate (SAAR) of 696,000 units. That was better than revised April numbers, but 5.9 percent lower than a year ago. The median sales price of a new house sold in May 2022 was $449,000. The average sales price was $511,400. That’s a $58,100 drop from the average price in April.

The seasonally adjusted months of inventory stood at 7.7 months of supply. It is worth noting that the supply of homes for sale at the end of the period rose in every category in May. Of the 444 thousand units for sale, there were 37,000 completed homes, 289,000 under construction and another 118,000 units which have not started construction. The inventory of new homes for for sale continues to grow as the Fed pulls the punch bowl on liquidity.

Home builders continue to put a positive spin on the situation. They still have a relatively healthy supply of customers who need a place to live, and inventory is still well below historical norms. That dynamic is changing, however, as the supply-demand equation begins to revert in opposite direction. We’re not in a buyer’s market at this point, but inventory is certainly more abundant than just a few short months ago. It’s pretty amazing how quickly the market has shifted.

It’s also amazing to see so many sellers and sell-side industry types in complete denial of what is happening. It’s pretty comical to see Dave Ramsey telling his flock of sheep that real estate prices aren’t going to go down when the head of the most powerful central bank on the planet explicitly told everyone he needs real estate prices to go down.

Here’s Ramsey selling the comfortable narrative. “Here’s the thing… real estate prices aren’t going down.”

That’s entertaining, particularly when average new home prices just plunged by $58,100 in May when rates were headed toward 6 percent. The mortgage purchase application index is still down 10 percent from a year ago. It’s comical to see Ramsey floating some garbage “statistics” about demographics and all the millennials who need to buy a house. You, know those same millennials who just saw their crypto dreams demolished in the imploding Ponzi schemes of digital tokens are chomping at the bit to buy $million dollar homes. Good luck with that one, Dave.

The water is fine. Dive right in and buy the dip. Home prices always go up, you know. Ben Bernanke told us so. Oh wait, maybe not the best example there.

If you want some “statistics” instead of sell-side bullshit, here are some observable facts.

New Homes For Sale May NSA 2022

Here’s the housing “shortage” to which Ramsey is referring to. LOL!

Housing Units Under Construction May 2022

The good congregation of Prosper Texas apparently didn’t get Ramsey’s memo that real estate prices aren’t going down. Updated NTREIS closing data for June (today’s figures) show a $133,000 drop in the median home price in Prosper compared to the May print. If you like statistics, that translates to a 14.25 percent monthly decline in home prices. It will be really interesting to see where the final June figures land.

Just remember that when the facts get in the way and the going gets tough, sell-side industry hype artists will resort to the same tactic used by central bankers. They will lie through their teeth.