The U.S. housing market continues to send mixed signals. For example, sales of new single‐family homes in March rose 4.5 percent to a seasonally adjusted annual rate of 692,000 units, according to new data from the Census Bureau. That was significantly better than anticipated and the 2nd-highest reading of this current economic cycle. Essentially all of the strength year-to-date has been driven by the southern region of the country, and a separate report from the Commerce Department suggests that a similar pattern can be seen in housing starts recently. Regardless, the latest upturn in new home sales is an encouraging sign for the longevity of the economic expansion in America because this leading indicator in the past has typically headed sharply lower ahead of a recession.
Existing home sales, though, fell by 4.9 percent in March to a seasonally adjusted annual rate of 5.21 million units, according to the National Association of Realtors (NAR). That was a larger than expected decline following February’s downward-revised 11.2 percent surge. However, the average time it takes for a property to sell decreased to just 36 days in March, down considerably from 44 days in February but up from 30 days a year ago. Forty-seven percent of homes sold in March were on the market for less than a month. The median selling price has been under pressure lately as sales remain robust in the lower-end of the market while more expense listings face additional headwinds from “the curtailment of tax deductions of mortgage interest payments and property taxes.” Additional price relief for all groups could occur due to the uptick in inventory resulting from sellers and buyers being motivated by the recent “plunge” in mortgage rates. Lawrence Yun, NAR’s chief economist, added that “Further increases in inventory are highly desirable to keep home prices in check. The sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”
Sources: Econoday, U.S. DoC, Calculated Risk, Bloomberg, NAR, FRBSL
Post author: Charles Couch