April New Home Sales Down 7%, But News Not All Bad

New residential home sales fell by nearly 7 percent in April, HUD and the Census Bureau reported yesterday, the first monthly decline in 2019.

The report said sales of new single-family houses in April fell to a seasonally adjusted annual rate of 673,000, 6.9 percent below March’s upwardly revised ate of 723,000 (from 692,000) but 7 percent higher than a year ago (629,000).

Regionally, all areas of the U.S. saw declines except the Northeast, where favorable weather conditions pushed sales up by 11.5 percent in April to 29,000 units, seasonally annually adjusted, from 26,000 units in March; sales fell by 12.1 percent from a year ago.

In the South, sales fell by 7.3 percent in April to 369,000 units, seasonally annually adjusted, from 398,000 units in March but improved by 5.1 percent from a year ago. In the West, sales fell by 8.3 percent in April to 188,000 units from 205,000 units in March, but improved by nearly 17 percent from a year ago. In the Midwest, sales fell by 7.4 percent in April to 87,000 units from 94,000 units in March but improved by 3.6 percent from a year ago.

The median sales price of new houses sold in April rose to $342,200; the average sales price rose to $393,700. Both indicators were 5 percent higher than a year ago. The seasonally adjusted estimate of new houses for sale at the end of April fell to 332,000, representing a supply of 5.9 months at the current sales rate.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted while new home sales came in below expectations, sales are ahead of a year ago amid lower mortgage rates.

“More favorable buying conditions alongside lower mortgage rates this year have breathed some life back into home sales,” Vitner said. “A shortage of more affordable homes likely played a role in the monthly drop, as sales of homes priced below $300,000 fell during April. Meanwhile, sales of homes priced above $300,000 increased during the month. Builder discounting of higher priced homes to clear rising inventories was likely a factor.”