“Roughly the entire (US) sales decline (in April) came in homes priced below $300,000, suggesting a shortage of affordable properties is hampering buyers and the effects of this year’s drop-in mortgage rates are waning. Such difficulties indicate residential investment may continue to be a drag on the economy despite steady job and wage gains.” (Bloomberg Economics, May 23,2019)
U.S. new home sales declined 6.9% in April to 673,000 units annualized following a robust 723,000 sales level in March. Sales rose a healthy 6.7% over a twelve-month time span,
Even though home sales fell in April, the new home sales trend is quite strong. At the current pace of sales, it would take 5.9 months to exhaust available supply, about matching the 6 months’ supply which is considered evidence of a balanced market. Share
In April, sales seemed to be weak in all regions. The median sales price increased 8.8% from a year earlier to $342,200, the highest since December 2017.
Indeed, as the chart below indicates, sales of new U.S. homes cooled in April from an 11-year high even as there was a surge in prices, adding to signs of softness in housing at the start of the second quarter.
On the price front, national home prices increased at a 3.7% annual rate in March, down from 3.9% in February, based on the Case-Shiller home price index. While in the recent past prices had been seeing double-digit annual gains, but those steep increases are clearly behind us.
It is worrisome, however, that based on the very strong economy, falling mortgage rates, and low unemployment, one should have expected housing starts and prices to have been much stronger. This could be a real sign about the coming slowdown in the US economy.
(Click on image to enlarge)
(Click on image to enlarge)
(Click on image to enlarge)
Comments
Log in or sign up to join the conversation.