New home sales were at a seasonally adjusted annual rate of 673,000 in April 2019, 6.9% below March’s estimate but 7.0% higher year over year, according to the latest joint release from the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). The median sales price of new houses sold in April 2019 was $342,200, and the average sales price was $393,700.
Genworth Mortgage Insurance Chief Economist Tian Liu notes that the below-average data is not all bad news. Liu notes that the homebuilding season is still progressing well.
“New home sales for April came in below expectations. This does not necessarily mean that the spring home selling season is not going well for homebuilders," Liu said in a statement. "Instead, homebuilders may be taking advantage of the lower interest rates and surging buyer interests by raising prices. As a result, sales volume came in slightly below expectations. The spring selling season is still progressing well for homebuilders, as the run rate for the year to date is still ahead of last year’s level.”
According to realtor.com Chief Economist Danielle Hale, April’s data indicates potential increases later in the year.
“This trend supports the fact that even though there will be ups and downs, lower mortgage rates have started to entice buyers this spring and will likely lead to an eventual pick up in existing home sales in the months to come,” Hale said. “We could see further improvement in new construction over the next year as home building still remains behind population and job growth in most areas. Strength in orders has already boosted builder confidence, as well as new construction. The median new home sales price, which had moderated the past few months, picked up as we see an increase of sales in the median and higher price tiers.”
LendingTree Chief Economist Tendayi Kapfidze notes that new home sales data is “always messy.” Kapfidze notes that sales fell despite interest rates moving lower and aiding affordability.
“The Census Bureau notes in the release that ‘it takes 6 months to establish a trend for new houses sold’ as they are among the most volatile and revision prone economic data series,” Kapfidze said. “At LendingTree we prefer the 3-month average to balance timeliness with information value. The 3-month average of 688,000 is the highest since the financial crisis.”
Inventory declined in April as well, and Kapfidze notes that the decline from 7.4 months supply in December to 5.9 in April may lead to price pressures.
“A lack of supply for lower valued homes may also be contributing to the mix of homes sold including more homes above $500,000,” he states.