March 2020 Residential Sales, Inventory and Prices

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Sales of new single-family houses in March 2020 were at a seasonally adjusted annual rate (SAAR) of 627,000 units (632,000 expected). This is 15.4 percent (±14.8 percent) below the revised February rate of 741,000 (originally 765,000) and 9.5 percent (±14.6 percent)* below the March 2019 SAAR of 693,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was -10.3%. For longer-term perspectives, NSA sales were 54.9% below the “housing bubble” peak but 16.7% above the long-term, pre-2000 average.

The median sales price of new houses sold in March fell ($8,700 or -2.6% MoM) to $321,400; meanwhile, the average sales price decreased to $375,300 ($11,900 or -3.1%). Starter homes (defined here as those priced below $200,000) comprised 11.5% of the total sold, down from the year-earlier 11.8%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 1.6% of those sold in March, down from 2.9% 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 decreased by 152,000 units (-15.0%). Although sales also fell (114,000 units; -15.4%), inventory for sale expanded in both absolute (+9,000 units) and months-of-inventory (+1.2 months) terms. 

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Existing home sales retreated in March (490,000 units or -8.5%), to a SAAR of 5.27 million units (5.4 million expected). Inventory of existing homes for sale expanded in both absolute (+40,000 units) and months-of-inventory (+0.6 month) terms. Because new-home sales fell by a larger proportion, the share of total sales comprised of new homes retreated to 10.6%. The median price of previously owned homes sold in March increased to $280,600 ($10,200 or +3.8% MoM). 

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Housing affordability improved (+6.7 percentage points) as the median price of existing homes for sale in January fell by $8,400 (-3.0; +6.9 YoY), to $268,600. Concurrently, Standard & Poor’s reported that the U.S. National Index in the S&P Case-Shiller CoreLogic Home Price indices rose at a not-seasonally adjusted monthly change of +0.4% (+4.2% YoY).

"The stable growth pattern established in the last half of 2019 continued into February,” said Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices. “The National Composite Index rose by 4.2% in February 2020, and the 10- and 20-City Composites also advanced (by 2.9% and 3.5%, respectively). Results for the month were broad-based, with gains in every city in our 20-City Composite; 17 of the 20 cities saw accelerating prices. The National, 10-City, and 20-City Composites all rose at a faster rate in February than they had in January.

“At a regional level, Phoenix retains the top spot for the ninth consecutive month, with a gain of 7.5% for February. Home prices in Seattle rose by 6.0%, with Tampa and Charlotte prices both gaining 5.2%. Prices were particularly strong in the West and Southeast, and comparatively weak in the Midwest and Northeast.

“Importantly, today’s report covers real estate transactions closed during the month of February, and shows no signs of any adverse effect from the governmental suppression of economic activity in response to the COVID-19 pandemic. As much of the U.S. economy was shuttered in March, next month’s data may begin to reflect the impact of these policies on the housing market.”

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.