Eye On Housing
Rising to the highest monthly pace since early 2008, new single-family home sales recorded strong gains in April, according to estimates from the Census Bureau and the Department of Housing and Urban Development.
Increasing 16.6% on a monthly basis and 23.8% year-over-year, the pace of new home sales came in at 619,000 on an annualized basis. Sales increased for all regions except the Midwest. The April rate of sales was significantly higher than recent trends, as noted on the graph below.
Inventory ticked down to 243,000 homes for sale this month, which represents only a 4.7 months’ supply at the elevated April sales pace. If sales remain near the current estimated rate, new single-family housing starts will need to accelerate to meet the rising demand. Of the total inventory of new homes listed for sale, only 56,000 consisted of completed, ready-to-occupy homes.
Another promising element in the report was the growth for sales in the $150,000 to $200,000 price range, which increased on a year-over-year basis to 10,000 sales in April. However, the distribution of sales did not change markedly, with only 18% of new homes sold in April priced at $200,000 or less. As regulatory costs rise, it remains difficult for builders to add inventory to the lower-price tiers.
Another interesting factor has been an increase in the median number of months new homes have been on the market since the end of construction. The April reading was 4.3 months, the highest since May of 2013.
As a whole, the April data represents good news for the building sector and is consistent with the Housing Market Index, which shows builders’ cautious optimism in the industry. NAHB’s forecast is for single-family starts to continue to expand as housing demand increases and existing inventory remains tight.
How do you account for the large increase (53%) in the Northeast?
Small sample size makes for a high degree of sample noise, including month-to-month, in the Northeast reporting. In terms of the economics, gains were likely associated with improved household wealth numbers following stock market declines at the start of the year.
Have you updated the two charts from this article in May? These are great visuals for monitoring demand and supply for new homes.
We will do another graph like this one next month.