After weakening in March, the volume of new home sales came in much better than expected in April.
Due to economic challenges associated with COVID-19, the National Association of Home Builders was forecasting an additional sales decline in April. However, new home sales estimates from the Census Bureau reveal relatively flat conditions compared to March.
Housing starts and building permits can indicate possible construction of new water well systems.
The Census estimates reported a 623,000 seasonally adjusted annual rate in April, after a slightly revised 619,000 pace in March. The April rate is down approximately 20 percent from the peak rate in January. It is reasonable to expect a downward revision for the April data next month given persistent weakness in the labor market. Nonetheless, mortgage application data and anecdotal reporting from builders indicates that housing demand picked up in recent weeks.
Overall, the data lend evidence to the NAHB forecast that housing will be a leading sector in an eventual economic recovery. Consider that despite the recent weakness, new home sales are reported to be 1.4 percent higher through April than the first four months of 2019. Sales were likely supported by price incentive use in April, with NAHB data indicating that two out of ten builders used such business strategies. Indeed, median new home pricing fell to $309,900 in April, which was 8.6 percent lower than a year ago.
And months’ supply is at a reasonable level of 6.4 despite the ongoing recession. The count of completed, ready-to-occupy new homes is 78,000 nationwide. While March home sales were drawn more from completed, ready-to-occupy homes (40 percent), this share actually declined in April to 35 percent. The share of not-started homes sold increased to 30 percent, which is a positive indicator for future housing starts.
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