Prices and …

Sales of new single-family homes fell in April, from 169 percent in March to 591,000, down 16.6 percent at a seasonally-consistent annual rate, and slightly ahead of the 582,000 speed below the lockdown recession. The April drop followed a 10.5 percent fall in March, a 4.7 percent fall in February and a 1.0 percent fall in January. Sales, which have been declining for four months, are down 26.9 percent from a year earlier (see first chart). Meanwhile, the 30-year fixed rate mortgage was 5.3 percent at the end of May, rising sharply from a low of 2.65 percent in January 2021 (see first chart).

Sales of new single-family homes declined in April in four regions of the country. Sales in the south, the largest by volume, fell 19.8 percent, while sales in the Midwest fell 15.1 percent, sales in the west fell 13.8 percent, and sales in the northeast, the smallest in volume, fell 5.9 percent a month. From a year ago, sales in the Northeast rose 17.1 percent but fell 12.4 percent in the West, 25.5 percent in the Midwest and 36.6 percent in the South, the lowest levels since December 2016 (see second chart).

The average selling price of a new single-family home was $ 450,600 (see third chart), from $ 435,000 in April (seasonally adjusted). April’s profit was 21.0 percent, compared to a 12-month profit of 19.6 percent a year earlier. On a 12-month average, average single-family home prices are still at record highs.

Total inventory of new single-family homes for sale jumped 8.3 percent in April to 444,000, which put monthly supply (inventory divided by 12 by annual sales rate) at 9.0, 30.4 percent from April and 91.5 percent year-over-year (fourth). See chart). The supply of the months reached a very high level based on historical comparisons and peaked with the previous recession (see Chart 4). Immersion in sales, higher month supply, and increase in mortgage rates should weigh on home prices between next month and quarter. However, the median time to market for a new home was very low in April, which came in at 2.8 months as against 3.9 in March.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 for over 25 years researching economic and financial markets on Wall Street. Bob previously headed Brown Brothers Harriman’s Global Equity Strategy, where he developed an equity investment strategy that combines top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a senior equity strategist at State Street Global Markets, a senior economic strategist at Prudential Equity Group, and a senior economist at Citicorp Investment Services and a financial markets analyst. Bob holds an MA in Economics from Fordham University and a BS in Business from Lehigh University.

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