New Home Sales: Increase Sharply

May 24, 2016
Bottom Line: New home sales rose sharply more than expected in April, the highest level since January 2008. Sales over the last three months have averaged 563K and are 3.6% above the 6 month average of 543K. The months supply dropped moderately as sales rose and inventories fell. New home prices continued to climb relative to their year ago levels. While existing home sales last week showed only a modest increase, this new home sales data (based on contract signings rather than closings like existing home sales reports) reveals higher potential strength going forward. New Home Sales ROSE by 16.6% to 619k. This compared with market expectations for an increase to 523k, from the March level of 511k. Sales are now 23.8% ABOVE their year ago level, but they are still 55.4% BELOW their July 2005 peak. The Inventory of Homes Available for Sale FELL by 0.4% to 243k. Inventories are now 17.4% ABOVE their year ago level but still 57.5% BELOW their July 2006 peak level. Combined with the increase in sales, theMonths' Supply dropped to 4.7 months from 5.5 months. This is modestly BELOW a "normal" level of 6.0 months and well BELOW its peak of 12.2 in January 2009. Home Prices ROSE with median prices 9.7% ABOVE their year ago level and with average prices 13.5% ABOVE their year ago level.
Article by contingentmacro