New US home sales fell twice as much as expected in April, data released on Thursday showed.
The figures rounded out a lackluster month of housing updates, all of which variously suggested the persistence of elevated mortgage rates is undercutting sentiment across the board.
Sales slipped 4.7% to a 634,000 annual rate, Thursday’s government report showed. Economists expected a more pedestrian 2.2% drop.
Notably, March’s pace was revised sharply lower to 665,000 from 693,000, making April’s drop all the more disappointing.
Sales were revised lower for January and February too. Indeed, Thursday’s release came with heavy historical revisions. March’s increase which, as initially reported, counted as the largest since December of 2022, is now far less impressive.
Months’ supply rose to 8.5, the highest since December and more than double the same metric for existing homes in April.
Prices remain very high. The median new home sold in America last month went for $433,500, down from March, but the highest since August outside of that.
Notably, the median price for April counted as a 3.9% YoY gain. With revisions, March’s median price was an increase over the prior year too, as was January’s.
We now have consecutive YoY gains for new home prices for the first time since early last year (it’s difficult to make out in the chart because March’s YoY gain was a minuscule 0.14%). April’s increase also counts as the third in four.
Thursday’s revisions significantly altered the price trajectory. Prior to the release, the median price had fallen on a YoY basis for six straight months and 10 out of 11. Now, the series shows a choppier path for prices and a lower peak ($460,300 in October of 2022).
Not to put too fine a point on it, but the scope of Thursday’s revisions only underscores my contention that these macro aggregates are largely useless to the extent revisions can change the narrative materially.
Recall that existing home prices rose a 10th month in April, according to NAR data released this week. So, prices are rising both for new and used homes, with financing rates still north of 7%.
Redfin data out Thursday showed prices hit a new record for the four-week period ending May 19. “Move-up buyers feel stuck because they’re ready for their next house, but it just doesn’t make financial sense to sell with current interest rates so high,” an agent in Salt Lake City told Dana Anderson. “The homeowners listing right now are often doing so because they need to.”
I get struck by many epiphanies when I read these posts. And so today. Current polls are showing many different opinions about the state of the economy. Many people with bills and rising taxes, who can’t afford a place to live, think it stinks. Others with stocks and swelling retirement accounts think it’s great. As I thought of this variety of opinions I couldn’t help but think of one of my favorite poems, “The blind men and the Elephant,” by John Godfrey Saxe. As a group of learned blind men approached an Elephant to discover its nature, each one offered a different description as he touched a different part of the beast. One’s reactions to one’s world and one’s life in it are mostly a matter of perspective. Having the right one is critical. I used to encourage my students to strive to continue learning because everyone is different and an individual’s observations have a huge impact on one’s decisions and one’s future. I told them that following the crowd rarely pays off, but the constant exposure to new information can create an insight no one else has ever had before and which, when effectively exploited, can create tremendous value, especially since making such discoveries is free.
I appreciate the perspective of perspectives. I once took my mother to a chemotherapy treatment when she was feeling run-down and discouraged, and her resolve to fight was slipping. As we sat in the waiting room, I heard some sniffling and looked over, horrified to see her quietly crying in her seat. I felt a personal sense of failure as her caretaker that day. I suggested we step out for some air, and the door behind us had hardly closed before she fully broke down in the hallway. When she had gathered herself, she explained that she felt ashamed about the way she was feeling and acting. I replied she had nothing to be ashamed of, etc. etc, when she cut me off and asked me if I had seen the bald 5-year old girl come in to the waiting room with her young mom? I had not. That was the last time she complained about her treatment.
That incident helped me appreciate the difference perspective can make despite the underlying facts and conditions not changing. But while perspectives of facts can differ and change, the facts themselves should remain generally fixed and self-evident. Which is why this recent Guardian poll seems so dismaying, because it shows half or more of the country thinks the country is in a recession, that the stock market is down for the year, and that unemployment is at a 50 year high.
https://www.theguardian.com/us-news/article/2024/may/22/poll-economy-recession-biden
It strikes me that these are the types of people for whom chemotherapy would never be necessary – you could simply tell them they don’t have cancer.
I have to say that, in the last few years, I’ve become convinced that too-strict zoning laws/general NIMBYism are responsible for a heck of lot of the problems facing the West (say, the USA, the UK and much of Europe… things are good in Japan (afaik) not too sure about Canada and I do believe Australia has problems too)
I primarily live in a ski town in Colorado- NIMBY is a religion here. So hypocritical- it is actually kind of funny to watch NIMBYism play out.
I get about 4 cold-calls a week from PE firms trying to buy my house in ‘all cash offers.’ I guess I shouldn’t be surprised, a huge portion of the residential stock in my area is held by corporate entities.