The U.S. Census Bureau and the Department of Housing and Urban Development released their New Residential Sales Report for the month of April. This report showed that signed contracts on new homes rose 4.1%. Year-over-year signed contracts rose 11.8% and are at the best number in 13 months.
The median home price fell 7.7% last month to $420,800, but this can be skewed due to the mix of sales. Actual appreciation reports are showing that home prices have started to rise once again. The Case Shiller’s Home Price Index showed a 0.2% monthly gain from January to February and the Federal Housing Finance Agency’s House Price Index showed a 0.5% gain of appreciation from January to February.
There were 433,000 new homes for sale at the end of April, and at the current pace of sales, there is a 7.6 months’ supply. Digging deeper into this report, there were only 70,000 or 16% of the homes that were actually completed projects. When looking at the pace of sales vs homes that are completed or move-in ready actual supply, there was only a 1.2 months’ supply. And while builders are still offering incentives, they are offering them in fewer instances, showing that demand and pricing pressure is there. Builders are selling more and getting more traffic due to the lack of existing homes for sale.
Speaking of the lack of inventory, it remains very low. Inventory levels increased slightly to 1.04 million, but are still extremely low. There was just a 2.9 months’ supply of homes, which is noted as very tight because 4.6 months is considered normal. But if you look at active listings, there are only 563,000, as many of the homes counted in existing inventory were under contract.
The housing market is still very active, even in the face of higher interest rates. If there were more homes available there would be more sales.