A Few Bits of Better News Housing data in April provided some unexpected signs of hope that the housing market may be stabilizing. While still premature to declare that 'the bottom has been reached,' we may be getting close. Positive permits and housing starts data was followed by a rare up-tick for new home sales in April. While April was the first time in over a year that single-family building permits posted a monthly gain, it was also the first time since October 2007 that new home sales posted an increase. However, the gain could be attributed to aggressive price cuts by builders in an attempt to undercut the resale market.
We continue to see positive fundamental changes in the new homes market like declining inventory levels and improved affordability levels. It will important for this kind of progress to continue as this year's home-buying season is more important than ever.
Equities swung back and forth during the past week as the market tried to digest record-high crude prices, concerns about inflation, but relatively positive economic data. Leading indicators suggested that economic growth may have bottomed out as the index posted a slight increase in April. Revised GDP also showed that the economy grew at a slightly faster pace than the advance report had shown. And while crude ended the week trading at over $127/barrel, it reached a new all-time high earlier in the week. Sustained high crude prices will continue to hurt consumer discretionary spending along with igniting concerns of inflation going forward. If price pressures begin to increase, it will not be surprising for the Fed to raise rates before the end of the year.
The Economy Preliminary estimates for first quarter gross domestic product were revised slightly higher to 0.9% from the advance figure of 0.6%. Many had expected the economy to contract during the first quarter due to the credit crunch and the continued troubles in the financial and housing markets. It is still widely expected that growth will remain weak going into the second quarter. The economy grew at a 0.6% clip during the previous quarter and the first quarter of last year. Revisions that showed a sharp drop in imports helped to improve growth estimates for the quarter.
Leading indicators in April increased slightly for the second straight month. The leading index now stands at 102.0, up from a March figure of 101.90. The index is also down from its levels six months ago when it was 103.20. Seven out of the ten components showed a month over month increase from March levels.
Consumer confidence in May fell for the fifth straight month to its lowest levels since October 1992. The consumer confidence index declined to 57.2 in May from an upwardly revised 62.8 in April which represents a 5.6 point drop from the previous month. Both the present situation and expectations index reported monthly declines as well.
Housing Market New and existing home sales moved in opposite directions in April. New home sales posted a rare 3.3% increase in April to a seasonally-adjusted 526,000 homes, up from a revised March figure of 509,000. This is the first time since October 2007 in which seasonally-adjusted annualized sales have posted a monthly increase. Sales for the previous three months, however, were revised lower by 30,000 units. At the current sales pace, there are 10.6 months of new homes supply on the market. The number of new homes for sale continued to decline as builders continue to scale back production. New home inventory declined to 454,000 which is the lowest it has been since May 2005. In April, median new home prices rebounded from its lowest levels since September 2006 in March to $246,100 in April. It was also the first time since November that median new home prices recorded a year-over-year gain.
Annualized sales of total existing homes declined 1.0% in April to 4.89 million units. Sales of existing homes are down 17.5% from the 5.93 million units in April 2007. Median existing home prices in April increased for the second straight month to $202,300 from a revised $200,100 in March. The number of existing homes for sale increased jumped 10.5% to 4.552 million units in April. At the current sales pace, there are 11.2 months of existing homes supply on the market. Existing home affordability declined slightly in March due to the increase in median existing home prices.
National average mortgage rates increased to 6.08% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on May 29th. This is the highest rates have been since mid-March. In the week ending May 23rd, the MBA's seasonally-adjusted Purchase Index increased slightly to 352.7 from 352.5 in the previous week. The latest figure reflects a 0.06 percent increase from last week but a 17.40 percent drop from the same period last year.
Washington, D.C. During the first quarter of 2008, the total number of new home sales in the Washington, D.C. market decreased by 50% from the same period in 2007. The first three months of 2008 yielded 2,389 total net sales compared to 4,727 during that time last year. Total net sales dropped by 62% in Washington, 53% in Jefferson, WV, 52% in Virginia, and 44% in Maryland.
Dallas The median price of attached homes sold in the region saw a decrease of 1%, dropping from $242,418 in the first quarter of 2007 to $240,990 in the first quarter of 2008. Collin County had the lowest median sales price of $178,740. Dallas County had the highest median sales price for attached homes at $275,847. Tarrant County had the most significant decrease in price from the previous year, decreasing from $333,662 to $242,150, a 28% decrease.
Riverside-San Bernardino, At the end of the first quarter there were 748 actively selling projects in the Inland Empire, 24 less since the start of the quarter, and 9 more than the same period as last year. Riverside County had 11 fewer projects while San Bernardino County 13 less active projects during the first quarter. San Bernardino Central and Riverside North West submarket saw the most significant gains in new projects during the quarter, up 1 project, while San Bernardino East had the most significant loss with 6 projects.
Philadelphia Total unsold inventory is calculated as the sum of speculative inventory plus future construction in active projects. The Philadelphia Region had 12,018 detached units left to sell in active detached projects at the end of the first quarter of 2008; there was a 46-months supply. Total inventory for the Pennsylvania sector of the market consisted of 6,047 units, a 42 months supply. Southern New Jersey had an inventory of 5,971 units, a 52-months supply.
Orange County The median sales price of single-family homes in Orange County came to $895,995 in the first quarter of 2008, a decrease of 16% from the same period last year. All submarkets posted declines, with the exception of the Coastal North and Inland South submarkets, which posted gains of 21% and 12%, respectively. The Coastal North submarket held the highest detached median sales price in the first quarter at $3,699,990, due to luxury product sold in the community of Newport Coast.
For market-level data and analysis please visit our website at http://www.hwmarketintelligence.com. For more detailed information on the indicators discussed in this key indicator alert, please visit the following links:
|Real GDP Growth||0.6%||D-|
|Purchase Mortgage Applications||352.7||F|
|Median Price Existing Home||$202,300||F|
|Existing Home Sales||4,890,000||D|
|Existing Home Inventory||4,552,000||F|
|Existing Home Affordability||54.8%||B|
|Median Price New Home||$246,100||F|
|New Home Sales||526,000||F|
|New Home Inventory||454,000||F|
|New Home Affordability Ratio||46.4%||B-|
Learn more about markets featured in this article: Los Angeles, CA.