April 2014 U.S. Home Sales, Inventory and Prices

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Sales of new single-family homes rose by a seasonally adjusted and annualized rate (SAAR) of 26,000 units (6.4 percent) to 433,000 in April. Sales were 4.7 percent below year-earlier levels, however. Meanwhile, the median price of new homes sold fell (by $5,900 or -2.1 percent) to $275,800. Although single-family starts increased more slowly than sales during April, the three-month average starts-to-sales ratio rose to 1.48 (from 1.40). Click here for our post on April housing permits, starts and completions.

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Single-unit completions dipped (15,000 units or -2.4 percent) in April. Even so, new-home inventory rose in absolute terms (+1,000 units) but declined in months-of-inventory terms (-0.3 month). 

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Existing home sales moved higher in April, by 60,000 units (1.3 percent) to 4.65 million units (SAAR). The share of total sales comprised of new homes retreated below 8 percent. The median price of previously owned homes sold in April increased (by $5,000 or 2.5 percent), to $201,700. Inventory of existing homes jumped in both absolute (+330,000 units) and months-of-inventory (+0.8 month) terms.

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Housing affordability dipped in March because the median price of existing homes for sale rose by $9,400 to $198,200. Concurrently, Standard & Poor’s reported that the 20-City Composite in the S&P/Case-Shiller Home Price indices posted a not-seasonally adjusted monthly change of +0.9 percent in March (+12.4 percent relative to a year earlier).

“The year-over-year changes suggest that prices are rising more slowly,” observed David Blitzer, Chair of the Index Committee at S&P Dow Jones Indices. “Annual price increases for the two Composites have slowed in the last four months and 13 cities saw annual price changes moderate in March. The National Index also showed decelerating gains in the last quarter. Among those markets seeing substantial slowdowns in price gains were some of the leading boom-bust markets including Las Vegas, Los Angeles, Phoenix, San Francisco and Tampa….

“Housing indicators remain mixed. April housing starts recovered the drop in March but virtually all the gain was in apartment construction, not single family homes. New home sales also rebounded from recent weakness but remain soft. Mortgage rates are near a seven month low but recent comments from the Fed point to bank lending standards as a problem. Other comments include arguments that student loan debt is preventing many potential first time buyers from entering the housing market.” 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.