April 2020 Residential Sales, Inventory and Prices

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Sales of new single-family houses in April 2020 were at a seasonally adjusted annual rate (SAAR) of 623,000 units (495,000 expected). This is 0.6% (±14.9%)* above the revised March rate of 619,000 (originally 627,000), but 6.2% (±17.1%)* below the April 2019 SAAR of 664,000 units; the not-seasonally adjusted (NSA) year-over-year comparison (shown in the table above) was -7.8%. For longer-term perspectives, NSA sales were 55.1% below the “housing bubble” peak but 12.9% above the long-term, pre-2000 average.

The median sales price of new houses sold in April fell ($17,000 or -5.2% MoM) to $309,900; meanwhile, the average sales price decreased to $364,500 ($12,900 or -3.4%). Starter homes (defined here as those priced below $200,000) comprised 11.9% of the total sold, up from the year-earlier 7.8%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 1.7% of those sold in April, up from 1.6% 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 April, single-unit completions decreased by 45,000 units (-4.9%). Since sales ticked higher (by 4,000 units; +0.6%), inventory for sale contracted in both absolute (-6,000 units) and months-of-inventory (-0.1 month) terms. 

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Existing home sales retreated in April (940,000 units or -17.8%), to a SAAR of 4.33 million units (4.325 million expected). Inventory of existing homes for sale contracted in absolute terms (-20,000 units) but expanded in months-of-inventory terms (+0.7 month). Because new-home sales edged higher while resales fell, the share of total sales comprised of new homes jumped to 12.6%. The median price of previously owned homes sold in April increased to $286,800 ($6,100 or +2.2% MoM). 

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Housing affordability deteriorated (+7.5 percentage points) as the median price of existing homes for sale in March rose by $9,700 (+3.6; +8.0 YoY), to $282,500. 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% (+4.4% YoY).

"March’s data witnessed the first impact of the COVID-19 pandemic on the S&P CoreLogic Case-Shiller Indices,” said Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices. “We have data from only 19 cities this month, since transactions records for Wayne County, Michigan (in the Detroit metropolitan area) were unavailable.

“That said, housing prices continue to be remarkably stable. The National Composite Index rose by 4.4% in March 2020, with comparable growth in the 10- and 20-City Composites (up 3.4% and 3.9%, respectively). In all three cases, March’s year-over-year gains were ahead of February’s, continuing a trend of gently accelerating home prices that began last autumn. March results were broad-based. Prices rose in each of the 19 cities for which we have reported data, and price increases accelerated in 17 cities.

“At a regional level, Phoenix retains the top spot for the tenth consecutive month, with a gain of 8.2% for March. Home prices in Seattle rose by 6.9%, followed by increases in Charlotte (5.8%) and Tampa (5.7%). 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 March. Housing prices have not yet registered any adverse effects from the governmental suppression of economic activity in response to the COVID-19 pandemic. As much of the U.S. economy remained shuttered in April, next month’s data may show a more noticeable impact.” 

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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.