New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances. Why Investors Care
| Released on 5/27/08 For Apr 2008 | ||||||||||||
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Highlights
New home sales improved in April, up 3.3 percent but against a downwardly revised March level. The current annual rate of 526,000, next only to March's 509,000, is the lowest since the early 90s with the year-on-year percentage decline of 42.0 percent the worst since the early 80s.
But prices steadied in the month, up 9.1 percent to a median $246,100 for an actual year-on-year increase of 1.5 percent and the best level since November. The year-on-year rate had been declining in prior reports, down 13.3 percent as recently as March. Supply remains heavy at 10.6 months vs. 11.1 months in March. But one positive is that the number of houses for sale, apart from the sales rate, is at 456,000 units, the lowest level in nearly three years. Year-on-year, homes for sale are down 16.9 percent for the biggest drop in 11 years. The supply of existing homes, in data released last week, stood at 11.2 months.
This report is mixed with sales troubling but the rise in prices a big positive that could limit pressure on the consumer and the degree of foreclosures. But the improvement will have to be confirmed by future reports and the appearance of strength in existing home sales. The markets reacted favorably to the report which has offset a dismal report on consumer confidence.
New home sales have yet to show signs of recovery and even continued in free fall in the latest report with March sales dropping 8.5 percent from February to an annual rate of 526,000 -- the lowest rate since 1991. The year-on-year decline of 36.6 percent was the worst since 1981. The big problem is still inventory overhang as months of supply jumped to 11.0 months from 10.2 months in February for the most bloated reading since 1981. The excess supply on the market has pushed down prices, which plunged 6.8 percent in the latest month for a 13.3 percent year-on-year decrease -- the steepest decline since 1970.
New home sales Consensus Forecast for April 08: 522 thousand-unit annual rate
Range: 500 thousand to 560 thousand-unit annual rate
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There is no question that lower interest rates boost home sales. Other factors also impact housing decisisions, such as employment and income growth, and wealth stemming from stock market gains. |
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