New Home Sales Jump in April
By Burt Carey
Sales of new homes hit their highest rate since 2008 in April, according to the Commerce Department’s U.S. Census Bureau.
April sales increased 16.6 percent over March figures, which correlates to a seasonally adjusted rate of 619,000 home sales projected for the year.
The median price of those new homes was $321,000, the highest median price ever recorded. That’s up 9.7 percent from sales one year ago. The median price reflects the number at which half of the homes sold at a higher price and half were lower.
While the sales point to improving employment rates and continued low interest mortgages, the 619,000 homes expected to sell this year lags behind the decade from 1990 to 2000, when Americans bought an average of 716,000 homes per year. New home sales peaked in 2005, with 1.3 million sales. The market began crashing in 2006 and by 2011 was selling just 300,000 homes per month. In 2015, Americans bought 503,000 new homes.
New home builders were surprised at the figures released this week but are buoyed that the spring sales are a harbinger of the industry’s best year in a decade.
Tuesday’s report showed that low housing inventories are holding back the overall market and have contributed to prices rising faster than wages for most would-be home owners. Analysts say it would take 4.7 months to sell the 243,000 new homes now on the market if the current pace holds up. In March, new home inventories were expected to sell in 5.5 months.
Inventory numbers in new homes are joined by low inventory numbers of existing homes, putting even more of a squeeze on first-time home buyers, and driving up prices.
New home sales are important to the overall economy because they create construction jobs as well as demand for building materials, such as lumber, bricks, cabinetry, bathroom fixtures and appliances. Construction expenses and commissions are used to calculate the country’s gross domestic product.
The news boosted the stocks of several publicly traded builders. Toll Brothers saw its stock jump 8.71 percent, KB Homes was up 7.46 percent, and Beazer saw a 9.17 percent increase.
Economists quietly worried that the April surge may be limited because of the inventory shortage and reluctance by builders to ramp up to pre-recession building levels. Such market pressure could result in even higher prices that would cause the number of sales to drop.
Regionally, new single-family homes sales increased 15.8 percent in the South to the highest level since December 2007. Sales soared 52.8 percent in the Northeast to their highest level since October 2007. Sales in the volatile West climbed 18.8 percent after dropping 15.2 percent in March. The only part of the country to see a decrease in new single-family homes sales was the Midwest, which fell 4.8 percent.
Source: Baret News