April 2019 New Home Sales

Sales of new homes declined in April 2019 according to the Census Bureau.  Falling to an annualized 673,000 units from the upwardly revised count of 723,000 (originally 692,000), this monthly decline is the first of 2019.  April’s setback hurt the year-over-year trend which fell to 7.0 percent from 10.6 percent in March.

Only one of the regions in America experienced an uptick in transaction volume.  Northeast sales rose 11.5 percent to 29,000 units.  However, Midwest contracts declined 7.4 percent after rising in each of the prior three months.  Likewise, volume in the West declined for the first time in four months, shrinking 8.3 percent.  Finally, the largest region, the South, fell 7.3 percent as 29,000 fewer homes were sold in the middle of the second quarter. 

Despite the volume setback, price proxies managed another month of gains.  Home sales in more expensive neighborhood helped push the average price of a home up to $392,700, rising $21,400 or 5.7 percent.  Similarly, the median priced home sold for $342,200, an uptick of $36,400 or 11.9 percent.

Supply figures were mixed.  The number of homes for sale declined 3,000 to 372,000 units.  However, the pace of sales slowed faster than inventory levels, so the inventory represents 4.9 months of transactions, rising from 4.6 months in March but is off from the 7.4 months level at the beginning of this year.

Interest rates are cooperating with this segment of the economy.  Lending rates continue falling versus last year’s averages.  According to the existing homes release from the National Association of Realtors, Freddie Mac indicated the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.14 percent versus 4.27 percent in March and 4.54 percent in all of 2018.

This iteration of new home sales was rather tepid.  The cost of money (interest rates) has continued getting cheaper since April; perhaps this market driven support will stimulate the next round of new home purchases.  If not, the current period of economic deceleration which started in the third quarter of last year could have further to run, especially since new home sales add directly to America’s gross domestic product.