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New Home Sales: Sharp Decline in April After Strong March

May 23, 2017
Bottom Line: New home sales fell sharply more than expected in April after reaching record levels in March. Seasonal adjustments increased the volatility due to the timing of the Easter holiday and spring breaks, especially in the West Coast. Overall, while these latest data suggest a slight slowdown in the West, the trend remains positive with national sales in the last three months still stronger than the last six- and twelve-months. Months' supply in new homes jumped, due to slower sales, but remains below what is considered "normal" -- and, if sales rebounded in May due to seasonal adjustments, then months' supply will likely come back down too.

New Home Sales FELL by 11.4% to 569k, after the prior month was revised higher to 642k. This compared with market expectations for a decline to 610k, from the unrevised March level of 621k. Sales are now 0.5% ABOVE their year ago level, -- but they are still 59.0% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale ROSE by 1.5% to 268k. Inventories are now 11.2% ABOVE their year ago level but still 53.1% BELOW their July 2006 peak level.

Combined with the decline in sales, the Months' Supply increased to 5.7 months from 4.9 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 FELL with median prices 3.8% BELOW their year ago level and with average prices 3.1% BELOW their year ago level.