At a time of fierce competition between new and existing homes, as distressed properties flood real estate markets and drive prices downward, new homes won ground in April as sales of new homes rose 7.3% for the month, according to U.S. Census Bureau data, while existing-home sales declined.
At a seasonally adjusted annual rate of 323,000, the new-home sales pace remains at less than half the 700,000 unit pace considered healthy and stands 23.1% below year-ago levels. However, both median and average home sale prices saw gains, improving to $217,000 and $268,900 respectively. And while existing-home inventories jumped last month to a 9.2-month supply, new-home inventories dropped in April to a record low 6.5-month supply at the current pace.
But as the recession has constantly reminded the home building industry, monthly data can be deceiving, especially when it comes to new-home sales numbers, which are known for being unreliable.
“You’ve got to wait for about four months of good numbers before you can conclude that things are starting to turn around,” Patrick Newport, U.S. economist at IHS Global Insight, told Builder in a phone interview. Newport calculates a four-month moving average of new-home sales numbers, and that metric, he says, indicates that “things are basically flat.”
Building permit numbers, another indicator Newport favors over new-home sales statistics, tell the same story of an industry dragging along the bottom.
April was the second month of improvements for new-home sales, after gaining 11.1% in March. However, March’s numbers were coming off the worst month for new-home sales on record. And while April’s added gains are better than no gains at all, “nearly every number in this press release is not statistically significant,” Newport said.
Claire Easley is senior editor, online, at Builder.
Learn more about markets featured in this article: Greenville, SC.