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New Home Sales: Continued Strong Rebound To End 1st Quarter

April 23, 2019

Bottom Line: Lower prices for new homes and lower mortgage rates drove new home sales higher for the third straight month. Sales over the last three months have averaged 660K and are 6.8% above the 6 month average of 618K, confirming the 2018 slowdown ended and suggesting a potential turn higher in the trend again. Sales in the Northeast in March were slow, likely due to weather, and suggesting some potential for a further rebound in the spring months. Finally, median sales prices were down nearly 10% from year ago levels, potentially a reflection of continued slower activity in the higher-end as that segment continues to adjust to tax changes.

New Home Sales ROSE by 4.5% to 692k, after the prior month was revised lower to 562k. This compared with market expectations for an increase to 620k, from the unrevised February level of 607k.

Sales are now 3.0% ABOVE their year ago level, -- but they are still 50.2% BELOW their July 2005 peak.

The Inventory of Homes Available for Sale FELL by 0.3% to 344k. Inventories are now 15.8% ABOVE their year ago level but still 39.9% BELOW their July 2006 peak level.

Combined with the increase in sales, the Months' Supply dropped to 0.0 months from 6.1 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 were MIXED with median prices 9.7% BELOW their year ago level and with average prices 1.8% ABOVE their year ago level.

Article by Contingent Macro Advisors