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Economy in Brief

New Home Sales Surprise with Increase in April
by Sandy Batten  May 26, 2020

• New single-family edged up 0.6% m/m in April to 623,000, counter to expectations, with downward revisions to February and March.

• Though down meaningfully so far this year, sales are still well above late-2018 lows.

• Mortgage applications for purchase have risen for the past five consecutive weeks, offering the possibility of further gains ahead as the economy continues to reopen.

Sales of new single-family homes surprise market expectations with a 0.6% m/m rise (-6.2% y/y) to 623,000 in April. They had plummeted a revised 13.7% m/m in March to 619,000. The Action Economics Forecast panel had looked for a collapse in April sales to 493,000. Sales are down sharply from their expansion high of 774,000 in January 2020, but remain well above their recent low of 552,000 in late 2018. This report also contained annual revisions which generally lowered sales over the past few months from that initially reported.

Weekly mortgage applications for purchase reported by the Mortgage Bankers Association have risen in each of the past five weeks and are now 41% above their early-April low, offering the possibility of further gains ahead as the economy continues to reopen. In April, sales rose in the Northeast (+8.7% m/m), the Midwest (+2.4% m/m) and the South (+2.4% m/m) and fell in the West (-6.3% m/m).

The median price of a new home declined to $309,900 in April (-5.2% m/m) while the average price of a new home decreased to $364,500 (-3.4% m/m). Home prices, which are not seasonally adjusted, have been range-bound for the past few years.

After having jumped up to 6.4 months in March, the months' supply of homes on the market eased back to 6.3 in April. This is still a troublesome level and is significantly higher than earlier this year, but is well below the nine-year high of 7.4 months seen in December 2018.

New home sales activity and prices are available in Haver's USECON database, while MBA loan applications can be found in SURVEYW. The consensus expectation figure from Action Economics is available in the AS1REPNA database.

U.S. New Single-Family Home Sales (SAAR, 000s) Apr Mar Feb Apr Y/Y % 2019 2018 2017
Total 623 619 717 -6.2 684 615 617
  Northeast 25 23 40 -26.5 30 32 40
  Midwest 86 84 84 26.5 72 75 72
  South 379 370 384 4.7 399 348 341
  West 133 142 209 -33.5 183 160 164
Median Price (NSA, $) 309,900 326,900 331,400 -8.6 321,500 326,400 323,100
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