Sales of new
single-family houses in March 2021 were at a seasonally adjusted annual rate (SAAR)
of 1,021,000 units (887,000 expected).
This is 20.7% (±23.7%)* above the revised February rate of 846,000 and is 66.8%
(±36.7%) above the March 2020 estimate of 612,000 units; the not-seasonally
adjusted (NSA) year-over-year comparison (shown in the table above) was +64.4%.
For longer-term perspectives, NSA sales were 26.5% below the “housing bubble”
peak but 85.5% above the long-term, pre-2000 average.
The
median sales price of new houses sold in March fell ($15,100 or -4.4% MoM) to $330,800;
meanwhile, the average sales price rose to $397,800 ($3,500 or +0.9% MoM). Starter
homes (defined here as those priced below $200,000) comprised 3.5% of the total
sold, down from the year-earlier 10.2%; prior to the Great Recession starter
homes represented as much as 61% of total new-home sales. Homes priced below
$150,000 were less than 0.5% of sales, down from 1.7% 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.
As mentioned in our post about housing permits, starts and completions in March, single-unit completions increased by 55,000 units (+5.3%). Although sales jumped (175,000 units; +20.7%) faster than completions, inventory for sale was stable in absolute terms but fell in months-of-inventory (-0.8 month) terms.
Existing home sales retreated further in March (230,000 units or -3.7%), to a SAAR of 6.01 million units (6.205 million expected). Inventory of existing homes for sale expanded in absolute (40,000 units) and months-of-inventory (0.1 month) terms. Because resales fell while new-home sales rose, the share of total sales comprised of new homes jumped to 14.5%. The median price of previously owned homes sold in March advanced to $329,000 ($18,400 or +5.9% MoM).
Housing
affordability dropped by 14.3 percentage points as the median price of
existing homes for sale in February rose by $9,100 (+3.0% MoM; +16.2 YoY), to $317,100.
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 +1.1% (+12.0% YoY).
“Strong home price gains continued in February 2021,” said Craig Lazzara, Managing Director and Global Head of Index Investment Strategy at S&P DJI. “The National Composite Index marked its ninth month of accelerating prices with a 12.0% gain from year-ago levels, up from 11.2% in January. This acceleration is also reflected in the 10- and 20-City Composites (up 11.7% and 11.9%, respectively). The market’s strength continues to be broadly-based: all 20 cities rose, and 19 cities gained more in the 12 months ended in February than they had gained in the 12 months ended in January.
“More than 30 years of S&P CoreLogic Case-Shiller data help us to put February’s results into historical context. The National Composite’s 12.0% gain is the highest recorded since February 2006, exactly 15 years ago, and lies comfortably in the top decile of historical performance. Housing’s strength is reflected across all 20 cities; February’s price gains in every city are above that city’s median level, and rank in the top quartile of all reports in 18 cities.
“These
data remain consistent with the hypothesis that COVID has encouraged potential
buyers to move from urban apartments to suburban homes. This demand may
represent buyers who accelerated purchases that would have happened anyway over
the next several years. Alternatively, there may have been a secular change in
preferences, leading to a permanent shift in the demand curve for housing.
Future data will be required to analyze this question.
“Phoenix’s 17.4% increase led all cities for the 21st consecutive month, with San Diego (+17.0%) and Seattle (+15.4%) close behind. Although prices were strongest in the West (+13.0%) and Southwest (+12.9%), every region logged double-digit gains.”
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.
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