Home sales encountered some headwinds in the first full month of spring. April sales of both new and existing homes fell off the strong sales figures posted in March although neither the Census data on new home sales nor the National Association of Realtors’ (NAR’s) existing home sales numbers particularly surprised the experts.
New home sales took the bigger hit. They dropped 11.4% from March to a seasonally adjusted annual rate of 569,000. Sales had been expected to retrench after three months of solid increases, but analysts did expect they would remain above what seems to have become a prized 600,000-unit marker.
March sales had been especially strong, reported as the best of the recovery at 621,000 units. They got even better, revised upward in this week’s report to 642,000 units, besting last July as the best month since well before the housing crisis.
Existing home sales advanced a solid 4.2% in March but retreated by 2.3% in April to an annual rate of 5.57 million. Inventories increased, (they did for new homes as well) but marketing time fell to the shortest since NAR started tracking it in 2011, a median of 29 days. Analysts had expected sales to decline, but were looking for a number in the 5.65 million range.
The West was particularly hard hit in both sales reports. The region’s new home numbers fell by 26.3% for the month and were down 13.7% on an annual basis. Existing home sales were better, but still 3.3% lower month-over-month, remaining about that same amount above sales a year earlier.
Price Increases Moderating
NAR always has the first home price report each month and their April figures did show prices might be moderating their earlier manic pace. The year-over-year increase was estimated at 6.0%, the lowest since December, and well below the 7.2% average reported by NAR over the previous three months.
The Federal Housing Finance Agency (FHFA) Housing Price Index (HPI) for March contained quarterly as well as monthly and year-over-year data and those numbers also showed a slight slowdown. Appreciation in the first quarter was 1.4% compared to 1.5% in Quarter 4, and the monthly rate dipped to 0.6% from 0.8% in February. The annual rate, at 6.0%, was down 0.4% from the year-over-year gains the previous month.
Freddie Mac’s monthly Outlook reversed an earlier forecast for lower home sales in 2017 and predicted interest rates will continue to linger in the 4.0% range. Low rates and the strong jobs market, will push home sales to the highest level since the housing crisis.
Then, just as we went to press, Freddie Mac announced rates hitting a 2017 low; down 7 basis points to 3.95%. This should help keep home-buying affordable and refinancing beneficial.