March 2019 Residential Sales, Inventory and Prices

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Sales of new single-family houses in March 2019 were at a seasonally adjusted annual rate (SAAR) of 692,000 units (645,000 expected). This is 4.5% (±17.6%)* above the revised February rate of 662,000 (originally 667,000) and 3.0% (±11.4%)* above the March 2018 SAAR of 672,000 units; the not-seasonally adjusted year-over-year comparison (shown in the table above) was also +3.0%. For longer-term perspectives, not-seasonally adjusted sales were 50.2% 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 was $302,700 (-$12,500 or 4.0% MoM); meanwhile, the average sales price slipped to $376,000 (-$9,300 or 2.4%). Starter homes (defined here as those priced below $200,000) comprised 16.2% of the total sold, up from the year-earlier 10.6%; prior to the Great Recession starter homes represented as much as 61% of total new-home sales. Homes priced below $150,000 made up 5.9% of those sold in March, up from 3.0% 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 jumped by 100,000 units (+11.9%). Although completions rose more quickly than sales (+30,000 units; 4.5%), inventory for sale contracted in both absolute (-1,000 units) and months-of-inventory (-0.3 month) terms. 

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Existing home sales retreated in March (-270,000 units), falling to a SAAR of 5.21 million units (5.30 million expected). Inventory of existing homes for sale expanded in both absolute (+50,000 units) and months-of-inventory terms (+0.3 month). The median price of previously owned homes sold in March jumped to $259,400 (+$9,300 or 3.7% MoM). Because resales fell while new-home sales increased, the share of total sales comprised of new homes rose to 11.7%. 

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Housing affordability was nearly unchanged as the median price of existing homes for sale in February inched up by $200 (+0.1%; +3.6 YoY), to $251,400. 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 +0.2% (+4.0% YoY).

“The pace of increases for home prices continues to slow,” said David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Homes began their climb in 2012 and accelerated until late 2013 when annual increases reached double digits. Subsequently, increases slowed until now when the National Index is up 4% in the last 12 months. Sales of existing single family homes have recovered since 2010 and reached their peak one year ago in February 2018. Home sales drifted down over the last year except for a one-month pop in February 2019. Sales of new homes, housing starts, and residential investment had similar weak trajectories over the last year. Mortgage rates are down one-half to three-quarters of a percentage point since late 2018.

“The largest year-over-year price increase is 9.7% in Las Vegas; last year, the largest gain was 12.7% in Seattle. Regional patterns are shifting. The three California cities of Los Angeles, San Francisco and San Diego have the three slowest price increases over the last year. Chicago, New York and Cleveland saw only slightly larger prices increases than California. Prices generally rose faster in inland cities than on either the coasts or the Great Lakes. Aside from Las Vegas, Phoenix, and Tampa, which saw the fastest gains, Atlanta, Denver, and Minneapolis all saw prices rise more than 4% -- twice the rate of inflation.” 

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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.