In a mixed report that confirms a reputation for unusual volatility, new home sales swung 11.4 percent lower in April to a much lower-than-expected annualized rate of 569,000. The offset is a 40,000 upward revision to March and February, now at 642,000 and 607,000. Because of the volatility, a 3-month average is essential to evaluate this report and here the news is clearly good. The average for April, at 606,000, is down only slightly from March's 611,000.
But the most recent news for April isn't so good. Sales slowed even as builders cut prices where the median fell 3.0 percent in the month to $309,200. Year-on-year, the median is down 3.8 percent and is roughly in line with sales which are up only 0.5 percent on the year.
New supply came into the market but not very much, at 268,000 units for a 4,000 increase. On a monthly sales basis, supply jumped to 5.7 months from 4.9 months to reflect April's sharp sales decline.
April was a bad month for all regions especially the West which at a 126,000 sales rate fell 26 percent in the month. Year-on-year, the Midwest is at 73,000 and is far out in front with a 20 percent gain followed by the South at 4.1 percent. The Northeast is down 5.1 percent on the year with the West, in an ominous reading perhaps given the region's importance to builders, down 13.7 percent.
One month is never enough to judge new home sales which eases the negative signals from April. But the report does follow last week's housing starts which also showed significant April weakness. Watch for existing home sales on tomorrow's calendar for an additional and very important indication on April for a housing sector that opened the year strongly but may be seeing unwanted slowing during the Spring selling season.
New home sales are one of the biggest strengths so far this year, closing out a very strong first quarter with a 621,000 rate in March that, next only to 622,000 in July last year, is by far the strongest of the expansion. Prices have been firming as supply remains low. Forecasters see March's rate for new home sales easing to 602,000.