April New Home Sales Bounce Back after March Drop

Sales of new single-family houses in April 2012 were at a seasonally adjusted annual rate of 343,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.3 percent above the March rate of 332,000 and is 9.9 percent above the April 2011 estimate of 312,000.  The March rate had originally been estimated at 328,000 so this revision somewhat moderates to -5.9 percent the sharp 7.1 percent decline which had been the focus of the March report.

On a non-seasonally adjusted basis there were an estimated 33,000 homes sold during the month, up from 32,000 in March.  This was the highest number of estimated monthly sales since April 2010 when there were 41,000 sales.  Sales one year earlier, April 2011, totaled 30,000.

At the end of April there were 146,000 new homes for sale (seasonally adjusted), more than half of which (88,000) were in the South.  The total represents a 5.1 month supply at the current sales pace, down from 6.7 months one year earlier when there were 174,000 new homes on the market.

Sales rose in all regions except the South where the annual rate was 177,000 units, down 10.6 percent from March but up 4.7 percent year-over-year. The rate in the Northeast was 28,000 units, up 7.7 percent from March and 16.7 percent from one year earlier.  The rate in the Midwest was 50,000, an increase of 28.2 percent and 22.0 percent respectively while in the West sales were at a rate of 88,000 units, up 27.5 percent and 12.8 percent.

The median sales price of new houses sold in April 2012 was $235,700 and the average sales price was $282,600 compared to $224,700 and $269,900 in April 2011.

MND received some reactions from industry analysts.  Andrew Grantham, an economist with CIBA World Markets said of the Census data "The slightly better figure reflected both a sharper rebound during the current month and some slight upward revisions to previous data. However, following a still sharp decline in March, the underlying trend in new home sales since the start of the year remains broadly flat, following the gradual uptrend towards the end of 2011. While this morning's figures were slightly better than expected, reaction should be limited as markets remain preoccupied with events and news flow out of Europe."

"The new homes sales data is much like what we saw from existing home sales yesterday," according to Sean Incremona, Economist, 4Cast Ltd. "There is progress but still at a gradual pace. It is still baby steps. This increase of 343,000 still comes in below that February high, which was probably inflated by weather. It does look like we have found a bottom, which is encouraging, but it is still very slow progress at this point."

Subodh Kumar, Chief Investment Strategist, Subodh Kumar and Associates said, "I don't think this adds anything new for the market at this stage because there was some indication housing was bottoming out from yesterday's numbers.

"It's positive in the sense there have been various signs the pressure on housing is starting to abate. If new housing starts to pick up, it has a chain effect on the rest of the housing market."