Today the new home sales report was released with a significant beat. The estimates were looking for a 480,000, but it came in at 623,000. As always, with new home sales, these numbers are very wild month to month, so the 3-month trend is more important. However, we have some good news in the details of this report. Just don’t ever forget this about new home sales data, we need revision confirmation.
New Home Sales
Sales of new single-family houses in April 2020 were at a seasonally adjusted annual rate of 623,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6 percent (±14.9 percent)* above the revised March rate of 619,000, but is 6.2 percent (±17.1 percent)*below the April 2019 estimate of 664,000.
The median sales price of new houses sold in April 2020 was $309,900. The average sales price was $364,500.
For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of April was 325,000. This represents a supply of
6.3 months at the current sales rate.
The most critical housing chart we have in America for the economy is the monthly supply chart for new homes. As long as this can stay below 6.5 months, housing starts have legs to grow with growing year over year sales data. The 2 months monthly supply average is running at 6.35 months. Housing starts are still up year to date, not a lot of people know that. If this monthly supply level holds, this means we never got back to highs in supply created late in 2018 when mortgage rates hit 5%. The median sales price declined, which is always good as builders continue their push of providing smaller homes into the sales mix.
From Fred: https://fred.stlouisfed.org/series/MSACSR
One more thing for tomorrow! The purchase application data has made an epic run in the last 5 weeks. Tomorrow might be the first time we have a positive year over year print since March 18th.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his Facebook page https://www.facebook.com/Logan.Mohtashami and is a contributor for HousingWire.