Steel Markets

New Home Sales Decline in April

Written by Sandy Williams

Sales of new homes softened in April after a 4 percent jump in March and a relatively strong first quarter. Sales of new single-family homes dipped 1.5 percent in April to a seasonally adjusted annual rate of 662,000, according to Commerce Department data. New home sales still exceeded the year-ago rate by 11.6 percent.

The dip in April was less than the 2.0 percent decline expected by some economists. New single-family homes represent about 11 percent of housing market sales.

The median sales price was $312,400 and average sales price $407,300. Inventory was estimated at 300,000 at the end of April, representing a supply of 5.4 months at the current sales rate.

Sales were strongest in the Northeast, jumping 11.1 percent from March. Sales in the Midwest and South were essentially flat. Sales were down 7.9 percent in the South.

“Despite the decline over the month, sales of new homes rose on a year-over-year basis, and remain near post-recession highs,” said Michael Neal, Assistant Vice President for Forecasting and Analysis, National Home Builders Association. “Each region of the country recorded a 12-month increase in April 2018. In addition, builders remain optimistic about future sales as both their expectations of sales over the next six months and their assessment of foot traffic from prospective buyers remains elevated.”

Neal added that recent trends in household formation indicate a switch from renter- to owner-occupied households as the homeownership rate for buyers under 35 increases.

Builders are still facing challenges finding qualified labor, lots and lumber prices. A NAHB analysis shows the recent increase in lumber prices has added more than $7,000 to the cost of an average single-family home.

“With job growth, rising incomes and overall economic strengthening, we can expect housing demand to continue to grow, particularly among millennials and other newcomers to the market,” said NAHB Senior Economist Michael Neal. “However, builders need to manage rising construction costs, as well as regulatory hurdles, to keep their homes competitively priced.”

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