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Mixed Results on New Home Sales

Phil Hall
May 23, 2018
Sales of new single-family houses in April 2018 were at a seasonally adjusted annual rate of 662,000

Sales of new single-family houses in April 2018 were at a seasonally adjusted annual rate of 662,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.5 percent below the revised March rate of 672,000 and 11.6 percent above the April 2017 estimate of 593,000.
 
The median sales price of new houses sold in April was $312,400 while the average sales price was $407,300.  The seasonally-adjusted estimate of new houses for sale at the end of April was 300,000, which represents a supply of 5.4 months at the current sales rate.
 
Reaction to the new data was mostly positive.
Sales of new single-family houses in April 2018 were at a seasonally adjusted annual rate of 662,000
 
“New home sales dipped a bit in April but continue to trend higher on a year-over-year basis,” said Freddie Mac Deputy Chief Economist Len Kiefer. “The absolute level of new homes sales remains quite low compared to current demand levels and the overall population. But you can’t sell what hasn’t been built. As long as single-family home construction remains at a low level, so too will new home sales. Homebuilders are confident about the market and construction of new single-family homes has been grinding higher, so look for new home sales to keep trending upward for the remainder of the year.”
 
“While inventory remains tight in all housing markets across the country, the number of new homes for sale inched up by 2,000 homes to 300,000, hitting the highest level in nine years,” said Danielle Hale, chief economist for Realtor.com. “At the same time, the typical new home has been for sale 3.8 months since completion which is a stark contrast to the existing home market, where the typical home was on market for only 59 days—less than two months—in April according to realtor.com data. This differential is partially a reflection of the higher price point of new home sales where the median price has reached $312,400, meaning that half of new homes sold above this price.”
 
But LendingTree Chief Economist Tendayi Kapfidze predicted the April data will be updated in the near future.
 
“Prices were driven up by a surge in sales of over $750,000 to 10 percent of sales, the highest ever, from four percent in March,” Kapfidze said. “There seems to be no reason for this and it will likely be revised away. The previous high was seven percent and the three-year average is five percent.”

 
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