April New Home Sales Reflect Growing Purchaser Confidence

After several months of brutish news, in which home builder confidence fell to an eight-year low, HUD and the Census Bureau had some good news: April new home sales rose for the first time since January.

The report said sales of new single-family houses in April rose to a seasonally adjusted annual rate of 623,000, 0.6 percent higher than the revised March rate of 619,000, but 6.2 percent lower than a year ago (664,000).

All regions except the West saw sales increases; the West saw a 6.3 percent drop in April sales to 133,000 units, seasonally annually adjusted, from 142,000 units in March and fell by 33.5 percent from a year ago.

In the South, sales rose by 2.4 percent to 379,000 units, seasonally annually adjusted, in April from 370,000 units in March and improved by 4.7 percent from a year ago. In the Midwest, sales also rose by 2.4 percent in April to 86,000 units from 84,000 units in March and improved by 26.5 percent from a year ago. In the Northeast, sales rose by 8.7 percent in April to 25,000 units from 23,000 units in March but fell by 26.5 percent from a year ago.

“New home sales blew past expectations in April,” said Mark Vitner, Senior Economist with Wells Fargo Securities, noting early consensus called for a drop to 480,000 units—a 143,000-unit difference. “Builders had said business was solid in April, in sharp contrast to most other activities.”

Vitner said builders reported traffic was “brisk” throughout most of the month and applications for purchase of a home have risen steadily in recent weeks. “The rise in new home sales is one of the only positive measures of economic activity in April,” he said. “Retail sales, restaurant dining and airline travel all plummeted, as many businesses shut down.”

The report said the median sales price of new houses sold in April 2020 fell to $309,900. The average sales price fell to $364,500. HUD/Census attributed the drop in prices to the decline in sales in the West, where homes are generally most expensive. On an annual basis, both median and average home prices rose by 4 percent.

The report said the seasonally adjusted estimate of new houses for sale at the end of April fell to 325,000, representing a supply of 6.3 months at the current sales rate.