Newly constructed single family homes sold at a seasonally adjusted annual rate of 454,000 in April, as reported in the joint release of the US Census Bureau and the US Department of Housing and Urban Development. This is a 2.3% increase from the upwardly revised pace in March and represents steady progress as the housing market recovers from the post-boom crash.
With the inventory of new homes for sale at historic lows, buyers bid up prices as demand outpaces supply at this stage of the recovery. The median sales price rose to $271,600 with 155,000 units available for sale nationally (not seasonally adjusted). Excluding units under construction and including only completed houses, ready to be occupied, the available supply is 39,000 units.
Razor thin inventories are a reflection of builder caution in the market place as well as the headwinds restraining a more robust housing recovery. Access to credit for both builders and home buyers remains a challenge, while builders struggle with shortages of available lots and skilled labor, as well as rising building materials prices.
The increase in the median price of new construction represents some welcome relief for builders who have endured the sharp declines in house prices combined with sharp increases in some of their input materials costs.
Despite the progress reflected in today’s report the housing market recovery is still only half complete. We expect the pace of sales to continue to improve through 2013 and 2014 as the housing market returns to normal with sales nearly twice today’s pace.