New home sales were down in April but there's a good reason

by Steve Randall24 May 2019

There was a 6.7% decline in new home sales in April but the 673,000 seasonally adjusted annual rate was down from an upwardly revised March total.

In fact, the March total was strong enough to set a new record monthly post-recession high of 723,000, which would have been hard to beat in April.

“The strong March sales pace was due to a combination of lower interest rates and the use of builder price incentives,” said National Association of Home Builders Chief Economist Robert Dietz. “At the same time, the April sales report was a solid number coming off a very strong March reading.”

The data from the HUD and US Census Bureau revealed that new home sales rose 1.3% in the Midwest, 6.7% in the West and 10.3% in the South; but fell 17.6% in the Northeast.

Three month data
LendingTree chief economist Tendayi Kapfidze says that the firm’s preferred measure, the three month average shows some further positives.

“The three-month average of sales, 688,000, was the highest since the financial crisis which is encouraging for continued growth,” he said adding that “the median sales price of $342,200 is the highest ever and was boosted by the share of homes sold over $500,000 to 20% from 16%.”

Greg Ugalde, chairman of the National Association of Home Builders said that the data shows some stabilization and modest growth for the start of 2019 following a tough fourth quarter of 2018.

“Our builder surveys show that traffic is steadily increasing. The challenge facing builders is how to deal with ongoing supply-side constraints such as a lack of buildable lots and labor that are putting upward pressure on housing costs,” he said.

 


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