New home sales faltered in April, continuing a downward slump that began in December and — with the exception of a 4-percent spike in March — has fallen in every month since.
According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD), new single-family home sales increased to a seasonally adjusted rate of 662,000 — a 1.5 percent month-over-month (+/- 11.8 percent) decrease in home sales. Despite the slump from March, sales are still 11.6 (+/- 23.7 percent) above April 2017’s 593,000.
The estimate of new homes for sale at the end of April was 300,000, which represents a 5.4-month supply at the current sales rate.
Realtor.com chief economist Danielle Hale didn’t seem too concerned about the month-over-month decline in sales — instead, she focused on the fact that inventory reached its highest level since 2009.
“While inventory remains tight in all housing markets across the country, the number of new homes for sale inched up by 2,000 homes to 300,000, hitting the highest level in nine years,” Hale said in an emailed statement. “At the same time, the typical new home has been for sale 3.8 months since completion which is a stark contrast to the existing home market, where the typical home was on market for only 59 days—less than two months—in April according to Realtor.com data.”
“This differential is partially a reflection of the higher price point of new home sales where the median price has reached $ 312,400, meaning that half of new homes sold above this price,” she added.
LendingTree Chief Economist Tendayi Kapfidze said April’s report shouldn’t be a cause for alarm, since it takes months for a downward (or upward) trend to be established.
“The Census Bureau notes in the release that ‘it takes 6 months to establish a trend for new houses sold’ as they are among the most volatile and revision prone economic data series,” Kapfidze said. “At LendingTree, we prefer the 3-month average to balance timeliness with information value.”
“The 3-month average of 664,000 is at the highest level since the financial crisis and encouraging for further growth.”
Other data from the Census Bureau and HUD:
- The median sales price of new homes sold in March was $ 407,300.
- The average sales price was $ 312,400.
- The West experienced the greatest dip in residential home sales (-7.9 percent, +/- 20.9 percent). The Northeast (+11.1 percent, +/- 67.5 percent) Midwest (+0.0 percent, +/- 45.8 percent) and South (+0.3 percent, +/- 14.7 percent) all experienced gains in April.
The Census Bureau and HUD use sample surveys to collect data for their home sales, which means this data is subject to sampling variability as well as the typical statistical variance. The survey is based on a sample of houses pulled from building permits. “Sales” are defined as deposits taken or sales agreements signed, not necessarily closings.