The spring market, which had pretty much staggered out of the gate, suddenly seems to have hit its stride. The three major sales indexes, existing homes, new homes, and pending sales, were all released this week and while all were strong, new home sales and pending sales were pretty spectacular.
New home sales, which had disappointed in March by dropping 1.5% came roaring back, rising by 16.6% from March (and those sales were also revised upward by 20,000 units). April sales were also 23.8% higher on a year-over-year basis.
The experts were as surprised as anyone by the new home numbers. They had been looking for sales in the neighborhood of 523,000, not the annual rate of 619,000 actually reported.
While they represent a small share of the nation's home sales, the recovery in the Northeast region was especially impressive. New home sales were up in April by 52.8% from March and were a surprising 323.1% higher than in April 2015. The West also performed well, up 18.8% and 23.6%, respectively.
Pending home sales also surged, rising 5.1% against expectations of an 0.8% increase. The Pending Home Sales Index gained 4.6% from a year earlier to hit the highest level in a decade.
Existing home sales were solid if not stunning, up 1.7% from March and 6.0% on an annual basis. Condo sales were particularly encouraging, jumping up 10.3% from March and running almost 5% ahead of the 2015 pace.
The first of the home price reports for March from the Federal Housing Finance Agency (FHFA) indicates that, so far at least, home price acceleration is continuing–with prices up 6.1% year-over-year. With inflation barely there, home prices represent real growth in household wealth.
An article in the CoreLogic blog asks, if mortgage credit standards are so high, and average FICO scores have risen dramatically (50 points in the last ten years), why are loan denial rates so low? The author, CoreLogic economist Archana Pradhan, concludes that borrowers are "self-sidelining."
What does that mean? Potential borrowers with credit scores in the mid-600 range are deciding on their own they can't qualify and are simply not applying for mortgages. This, Pradhan says, has different policy implications than does too tight credit. Perhaps more awareness of the broader scope of loan opportunities needs to be communicated to the consumer. Call for the latest information.
We hope you enjoy the long holiday weekend while remembering the true meaning of Memorial Day.