New single-family home sales ballooned in May as builders raced to keep up with high demand, which has found a rare outlet in the new-home market as high interest rates keep existing-home owners from selling. 

Specifically, sales jumped 12.2% month over month and 20% year over year to an annual rate of 763,000 homes, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported.   

Meanwhile, the median price of a new home sold during the month rose to $416,300 from $402,400 in April. Year over year, the median price was down from $450,700 in May 2022.  

“New-home sales, along with new-home construction, have accelerated in recent months despite high mortgage rates,” First American Economist Ksenia Potapov said. “While existing-home inventory, which has historically made up approximately 90% of total home inventory, is severely restricted, new homes offer an attractive alternative.” 

By region, the pace of new-home sales was up across the country, with monthly increases of 17.6%, 17.4%, 11.3% and 4.1% in the Northeast, West, South and Midwest, respectively.       

Months’ supply of new homes for sale fell 11.8% to 6.7 months from 7.6 months in April; on a year-over-year basis, inventory was down 19.3% from an 8.3-month supply in May 2022.