March 2018 Residential Sales, Inventory and Prices

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Sales of new single-family houses in March 2018 were at a seasonally adjusted annual rate (SAAR) of 694,000 units (630,000 expected). This is 4.0% (±18.6%)* above the revised February rate of 667,000 (originally 618,000 units) and 8.8% (±17.0%)* above the March 2017 SAAR of 638,000 units; the not-seasonally adjusted year-over-year comparison (shown in the table above) was 11.5%. For longer-term perspectives, not-seasonally adjusted sales were 50.0% below the “housing bubble” peak but 30.1% above the long-term, pre-2000 average.

The median sales price of new houses sold in March 2018 was $337,200 (+$11,400 or 3.5% MoM); meanwhile, the average sales price edged down to $369,900 (-$900 or 0.2%). Starter homes (defined here as those priced below $200,000) comprised 11.8% of the total sold, down from the year-earlier 14.8%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 4.4% of those sold in March, down from 4.9% a year earlier.

* 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 fell by 41,000 units (-4.7%). The combination of decreasing completions and rising sales (27,000 units; +4.0%) caused inventory for sale to shrink in months-of-inventory terms (-0.2 month) while remaining stable in absolute terms. 

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Existing home sales rose by 60,000 units (+1.1%) in March, to a SAAR of 5.60 million units (5.528 million expected). Inventory of existing homes for sale expanded in absolute and months-of-inventory terms (+90,000 units; +0.2 month). Because new-home sales increased by a greater proportion than existing-home sales, the share of total sales comprised of new homes advanced, to 11.0%. The median price of previously owned homes sold in March jumped to $250,400 (+$9,500 or 3.9% MoM). 

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Housing affordability degraded modestly as the median price of existing homes for sale in February edged up by $1,500 (+0.6%; +5.9 YoY), to $243,400. 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 +0.4% (+6.3% YoY) -- marking a new all-time high for the index.

“Home prices continue to rise across the country,” said David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The S&P CoreLogic Case-Shiller National Index is up 6.3% in the 12 months through February 2018. Year-over-year prices measured by the National index have increased continuously for the past 70 months, since May 2012. Over that time, the price increases averaged 6% per year. This run, which is still ongoing, compares to the previous long run from January 1992 to February 2007, 182 months, when prices averaged 6.1% annually. With expectations for continued economic growth and further employment gains, the current run of rising prices is likely to continue.

“Increasing employment supports rising home prices both nationally and locally. Among the 20 cities covered by the S&P CoreLogic Case-Shiller Indices, Seattle enjoyed both the largest gain in employment and in home prices over the 12 months ended in February 2018. At the other end of the scale, Chicago was ranked 19th in both home price and employment gains; Cleveland ranked 18th in home prices and 20th in employment increases. In San Francisco and Los Angeles, home price gains ranked much higher than would be expected from their employment increases, indicating that California home prices continue to rise faster than might be expected. In contrast, Miami home prices experienced some of the smaller increases despite better than average employment gains.” 

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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.