March 2017 Residential Sales, Inventory and Prices

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Sales of new single-family houses in March 2017 were at a seasonally adjusted annual rate (SAAR) of 621,000 units (584,000 expected). This is 5.8% (±15.5%)* above the revised February rate of 587,000 (originally 592,000) and 15.6% (±15.0%) above the March 2016 SAAR of 537,000; the not-seasonally adjusted year-over-year comparison (shown in the table above) was 16.0%. For a longer-term perspective, March sales were 55.3% below the “bubble” peak but 10.9% above the long-term, pre-2000 average.

The median sales price of new houses sold in March 2017 was $315,100 (+$22,000 or 7.5%). The average sales price was $388,200 (+$14,600 or 3.9%). Starter homes (those priced below $200,000) comprised 17.2% of the total sold, up from March 2016’s 14.0%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 6.9% of those sold in March, a modest rise from March 2016’s 4.0%.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero. 

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As mentioned in our post about housing permits, starts and completions in March, single-unit completions rose by 60,000 units (+7.9%). Since the increase in completions outpaced that of sales, new-home inventory expanded in absolute (+3,000 units) terms; it shrank, however, in months-of-inventory (-0.2 month) terms. 

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Existing home sales jumped by 240,000 units (+4.4%) in March, to a SAAR of 5.710 million units (5.605 million expected). Inventory of existing homes expanded in absolute terms (+100,000 units) but was unchanged in months-of-inventory terms. With new-home sales increasing at a proportionately faster rate than existing-home sales, the share of total sales comprised of new homes inched up to 9.8%. The median price of previously owned homes sold in March increased by $8,200 (+3.6%), to $236,400. 

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Housing affordability remained essentially unchanged as the median price of existing homes for sale in February advanced by $1,200 (+0.5%; +7.6 YoY), to $229,900. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices posted a not-seasonally adjusted monthly change of +0.2% (+5.8% YoY), bringing home prices to a fourth consecutive all-time high.

“Housing and home prices continue to advance,” said David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The S&P Corelogic Case-Shiller National Home Price Index and the two composite indices accelerated since the national index set a new high four months ago. Other housing indicators are also advancing, but not accelerating the way prices are. As per National Association of Realtors sales of existing homes were up 5.6% in the year ended in March. There are still relatively few existing homes listed for sale and the small 3.8 month supply is supporting the recent price increases. Housing affordability has declined since 2012 as the pressure of higher prices has been a larger factor than stable to lower mortgage rates.

“Housing’s strength and home building are important contributors to the economic recovery. Housing starts bottomed in March 2009 and, with a few bumps, have advanced over the last eight years. New home construction is now close to a normal pace of about 1.2 million units annually, of which around 800,000 are single family homes. Most housing rebounds following a recession only last for a year or so. The notable exception was the boom that set the stage for the bubble. Housing starts bottomed in 1991, drove through the 2000-2001 recession, and peaked in 2005 after a 14-year run.” 

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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.