One might expect that the new era of low interest rates, the record low unemployment numbers, and spring flowers popping up everywhere would prompt a flood of home buyers into the market. One would be wrong.
Both new and existing home sales were down in April. The decline in new home sales, down almost 7% wasn’t a big surprise. They had enjoyed a three-month winning streak and a pull-back was expected. The downturn was pushed along by a strong upward revision of the March number from 692,000 to 723,000. April’s annual rate of 673,000 wasn’t all that bad–second only to March in the last 12 months–and sales are still up 7.0% year over year.
New home sales were down in every region but the Northeast and fell the most in the West, 8.3%, but are still 16.8% higher than last year.
Existing home sales were another matter. Analysts had expected a big boost to over 5.3 million units. Instead they ticked down 0.4% to just under 5.2 million and are 4.4% lower than in April 2018. Single-family sales were down as well, falling 1.1% below March sales and 4.0% from those in April 2018. Condo sales however soared 5.6%.
Good News for Buyers
One bright spot; slowing sales mean growing inventories. The number of new homes available for sale rose slightly while the stock of existing homes jumped from 1.67 million in March to 1.83 million by the end of April. The new home inventory is now estimated at 5.9 months and at 4.0 months for existing ones.
Sales aside–there was a lot of good news for homebuyers this week, including interest rates which dipped another basis point this week. Fannie Mae says it appears that builders are focusing increasingly on meeting the needs of entry-level buyers. It isn’t happening overnight, but the median size of a newly constructed home has shrunk from 2,500 square feet at the beginning of 2015 to a current median of 2,300 square feet and pricing seems to reflect the change. Median sales prices have fallen 7.1% over the same period.
Recent pricing news for existing homebuyers is promising as well. CoreLogic’s National House Price Index rose only 3.7% in March, the smallest annual gain since May 2012. This was nearly identical to the National Association of Realtor’s estimate for April in its existing home sales report.
And in case you were wondering about those mortgage rates–the 4.06% average reported Thursday by Freddie Mac is exactly 60 basis points lower than the rate one year ago.
Time to consider buying a home, perhaps?