New-home sales have rebounded from a sharp drop in March, reflecting a glimmer of hope for the coronavirus-stricken US economy.
Sales of newly built, single-family homes edged up 0.6% to a seasonally adjusted annual rate of 623,000 units in April, according to data from the US Department of Housing and Urban Development and the US Census Bureau. Despite the uptick, the rate of home sales in April was 6.2% lower than the April 2019 pace.
“The April estimates from Census came in better than forecast, so there is a possibility of a downward revision in the next release,” said Robert Dietz, chief economist of the National Association of Home Builders (NAHB). “Nonetheless, the data matches recent commentary from builders and reflects recent gains in mortgage applications. Despite significant challenges in overall economic conditions, the months’ supply held steady at a reasonably healthy level of 6.3.”
Inventory dropped 3% year over year to a 6.3 months' supply, with 325,000 new single-family homes for sale. However, only 78,000 of those homes were completed and ready to occupy. Due to the increased use of builder price incentives in April, the median price of a new home fell to $303,900, down from $339,000 the same period a year ago.
Three of four regions reported an increase in new-home sales. The Northeast saw the highest gain of 8.7%, followed by the Midwest and the South at 2.4% both. Meanwhile, the West posted a 6.3% drop in sales.
“The April data for new home sales show the potential for housing to lead any recovery for the overall economy,” NAHB Chairman Dean Mon said. “Because the housing industry entered this downturn underbuilt, there exists considerable pent-up housing demand on the sidelines. The experience of the virus mitigation has emphasized the importance of home for most Americans.”