The Census Bureau reported new home sales in May at a seasonally adjusted annual rate (SAAR) of 763,000 units. That was 12.2 percent better than the revised April estimate and 20 percent better than May of last year. So what drove the jump in new home sales? Lower prices!

“The median sales price of new houses sold in May 2023 was $416,300. The average sales price was $487,300.”

That average new home price of $487,300 is the lowest in 2023 and over $28,000 lower than the March estimate. The May average price is $81,400 lower than the estimate for December 2022.

The May report from the Census Bureau shows some dramatic downward revisions for new home prices in the 2023 figures. Apparently Census finally got the memo. Builders have been combining lower prices with rate buy-downs and other incentives for most of the year. Every time rates bounce toward seven percent builders goose the incentives to keep the pipeline flowing. Affordability is still the key to sales in the current housing market. If rates move up, builders respond to offset the blow to affordability.

Unlike existing home sellers, builders are pretty much agnostic when it comes to the sales equation. They have product to move, and they will generally do what it takes to hit their quarterly targets. There’s no emotional attachment to the sale. It’s just business.

North Texas new home prices show to be roughly 1 percent lower than May of last year. Median and average prices are down 1.4% respectively. In terms of price per square foot median new home prices were down 4.3 percent in Denton County compared to May of last year. Denton County new home prices are down 8.2 percent compared to July of 2022. If you factor in rate buy-downs, commission bonuses and other incentives from builders which are often not reflected in the MLS, prices would probably be a bit lower.

The non-adjusted sales numbers from Census show 424,000 new homes available for sale at the end of May. That was a slight increase from April. Builders are still working through a large backlog of new construction. They are doing what they have to do to meet buyer demand and keep the pipeline moving.