Spring Home Sales Off to a Slow Start
- New Home Sales for March fell sharply by 14.5 percent to an annual rate of just 384,000 units.
- The Months’ Supply of New Homes on the market increased to 6.0 months’ worth in March.
- Existing Home Sales for March eased by 0.2 percent to a 4.59 million unit annual rate.
- The Months’ Supply of Existing Homes was increased to 5.2 months’ worth in March.
Much of the U.S. economic data stream has improved after the winter freeze. Home sales have not. Because of the lead time between offers, contracts and sales we remain optimistic that the upward trend in new home sales, visible since early 2011, reasserts itself soon. Likewise we remain optimistic that the recent downward trend in existing home sales, that began last August, reverses itself soon. One support for our optimistic outlook is that mortgage applications for purchases (as opposed to refinance) were up in late March through early April. Also, mortgage rates have eased through April. One final supportive point, the overall economy is improving. Job growth in February and March was solid, most other U.S. economic indicators are positive. Still, if home sales do not lift soon, that would be a fundamental challenge to our cautiously optimistic outlook for the U.S. economy.
New home sales for March fell sharply, down 14.5 percent to a 384,000 unit annual rate. That was the worst sales rate since last July. Sales in the Northeast actually increased for the month, up 12.5 percent. However, new home sales in the weather-plagued Midwest fell by 21.5 percent in March. Sales were down significantly in both the South and the West regions as well. The months’ supply of new homes increased to 6.0 months’ worth in March. That could come down quickly if April and May sales rebound as expected. According to the Census Bureau, the median sales price of a new house was up 12.6 percent in March from a year ago. Existing home sales were essentially unchanged in March, yet officially down 0.2 percent to a 4,590,000 unit annual rate. The months’ supply of existing homes on the market ticked up to 5.2 months’ worth in March. According to the National Association of Realtors, the median sales price of an existing home was up 7.9 percent in March from a year earlier.
Market Reaction: U.S. equity markets are down. Treasury yields are down at the long end of the yield curve. NYMEX crude oil is down to $101.63/barrel. Natural gas futures are up to $4.80/mmbtu.
For a PDF version of this Comerica Economic Alert click here: New_Home Sales 04-23-14.