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Economic Watch: Existing and New Home Sales Slow

May 24, 2017

By Evan Lockridge

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Sales of both existing and new homes fell in April, according to two separate reports, as the nation’s home supply continues tightening.

Stubbornly low supply levels held down existing-home sales in April and also pushed the median number of days a home was on the market to a new low of 29 days, according to figures released Wednesday by the National Association of Realtors (NAR).

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 2.3% to a seasonally adjusted annual rate of 5.57 million in April from a downwardly revised 5.70 million in March. This drop is more than analysts had been expecting.

Despite last month's decline, sales are still 1.6% above a year ago-- and at the fourth highest pace over the past year.

According to Lawrence Yun, NAR chief economist, every major region except for the Midwest saw a retreat in existing sales in April.

"Last month's dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2%, and new and existing inventory is not keeping up with the fast pace of homes that are coming off the market," he said. "Demand is easily outstripping supply in most of the country and it's stymieing many prospective buyers from finding a home to purchase."

The median existing-home price for all housing types in April was $244,800, up 6% from April 2016, marking the 62nd straight month of year-over-year gains.

Single-family home sales, the largest share of the market, decreased 2.4% to a seasonally adjusted annual rate of 4.95 million in April from 5.07 million in March, but are still 1.6 above the 4.87 million pace a year ago.

New Home Sales Fall rrom Nearly 10-Year High

This report follows one from the Commerce Department on Wednesday that showed sales of newly built single-family homes in April dropped for the first time in 2017, falling 11.4% to a seasonally adjusted annual rate of 569,000 units, far more than Wall Street expectations.

Sales numbers for the first three months of the year were all upwardly revised, and the March sales pace was the highest since October 2007.

“New home sales were strong in the first three months of 2017, so some pullback in April is to be expected,” said National Association of Home Builders Chief Economist Robert Dietz. “However, our forecast calls for new home sales to increase throughout the year, buoyed by rising household formations, continued job growth and tight existing home inventory.”

The inventory of new home sales for sale was 268,000 in April, which is a 5.7-month supply at the current sales pace, up from a 4.9 month supply in March, but regarded as still a bit tight. The median sales price of new houses sold was $309,200.

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