April 2018 New Home Sales

Sales of new homes remain volatile but in an upward trend.  According to the latest release from the Census Bureau, 662,000 new contracts were signed on an annualized basis in April 2018.  This is a decline of 10,000 units from a month earlier.  Confirming the indicator’s volatile characteristic, March’s tally was revised lower by 22,000 homes.  Nonetheless, sales are up 11.6 percent versus a year earlier.

Regional data were mixed.  Sales in the Northeast climbed 11.1 percent on an annualized basis.  Changes to volume were not as robust in other parts of the country as transactions in the South edged up just 0.3 percent, while Midwest purchases were unchanged.  Sales in the West were dismal, falling 7.9 percent. 

Price proxies were mixed as well.  The median priced home dropped 7.4 percent to $312,400.  However, an average home set buyers back an additional 10.1 percent compared to a month earlier, or $407,300.  Higher priced homes are skewing the average higher as transactions above $750,000 more than doubled while other price ranges were mostly unchanged or lower.

Inventory figures were mixed.  The number of homes for sale declined 1,000 units to 300,000.  However, since the pace of sales fell faster than the number of units on the market, these available homes now represent 5.4 months of transactions versus 5.2 months in March.

This indicator’s trend is probably more useful than the details of each monthly release.  Looking at trends helps filter out noise in data.  Since this release from the Census Bureau is notoriously volatile and frequently revised, determining whether its inclination is up or down is probably the best approach to analyzing the release.  For now, it is decidedly higher, so Atlas currently considers New Homes Sales as constructive to the overall economy.