New Home Sales: Surprise Strength in April

May 26, 2020
Bottom Line: New home sales in April confirmed strength seen in several other indicators of housing activity. After depressed levels in March, sales were expected to fall even further in April but held firm in most parts of the country. Sales in the Northeast, hard-hit by the novel coronavirus shutdowns, were notably stronger as better weather aided activity. Sales in the South, the largest region for this report, were stronger, while sales in the West were slower. Average and median home prices were lower as lower-priced regions saw better activity. Overall, while supply of new homes is higher relative to sales, the new home market remained resilient to shutdowns related to the novel coronavirus and suggests housing activity should offer a boost to GDP in the 2nd Quarter amid weakness in most other sectors. New Home Sales ROSE by 0.6% to 623k, after the prior month was revised lower to 619k. This compared with market expectations for a decline to 480k, from the unrevised March level of 627k. Sales are now 6.2% BELOW their year-ago level, -- but they are still 55.1% BELOW their July 2005 peak. The Inventory of Homes Available for Sale FELL by 1.8% to 325k. Inventories are now 3.0% BELOW their year-ago level but still 43.2% BELOW their July 2006 peak level. Combined with the increase in sales, the Months' Supply dropped to 6.3 months from 6.4 months. This is modestly ABOVE a normal level of 6.0 months and well BELOW its peak of 12.2 in January 2009. Home Prices FELL with median prices 8.6% BELOW their year-ago level and with average prices 5.4% BELOW their year-ago level.