New home sales reach pre-recession high
Sales of newly-built single-family homes have reached levels not seen since before the financial crisis.
Data from the HUD and US Census Bureau show a 16.6 per cent rise in sales in April, reaching a seasonally-adjusted annual rate of 619,000 units; the highest sales pace since January 2008.
The National Association of Home Builders greeted the figures with optimism: “This month’s jump in new home sales is a positive sign that growing demand will keep the housing sector on an upward trajectory through the spring buying season,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.
Inventory was at 4.7 months’ supply in April, based on current sales levels, with 243,000 new homes for sale. The median sales price was $321,100.
Low inventory is having a sharper effect than expected
The price of homes is rising faster than expected as low inventory has a greater impact. Data from Zillow shows that prices nationally rose 5 per cent in the 12 months to April, surpassing the 2 per cent that the firm’s analysts had predicted.
Inventory is down 3.7 per cent overall but in the entry-level sector there has been an 8 per cent drop in the past year. Some areas are more severely impacted; Portland for example has seen inventory slump 40 per cent.
Zillow’s chief economist Dr Svenja Gudell says things aren’t about to get any easier: "New construction has been sluggish over the past year; we're building about half as many homes as we should be in a normal market. There still aren't enough homes on the market to keep up with the high demand from every type of home buyer.”
Sales may slow following strong April says Barclays
The surge in home sales seen in many markets in April may mean future sales are lower. Barclays believes that the strong start to the spring buying season with national sales up 16.6 per cent on an annual basis, could be reversed in data for May and June.
The global bank says that the US housing market is strong despite recent volatility but that the surge in sales in April will have pressured already-tight inventories nationally and is likely to impact sales volume.