The Commerce Department said Friday that new home sales rose more than expected in the month of April, and the inventory of houses on the market hit a 3-1/2 year-high. New sales increased 6.4 percent to a seasonally adjusted annual rate of 433,000 units, ending what had been two straight months of declines.
March’s sales pace was revised up to 407,000 units from the previously reported number of 384,000 units. However, the government has made revisions to the model it previously used to adjust the data for seasonal fluctuations, which affected the monthly data.
The new revisions threw experts for a loop, as economists polled by Reuters had forecast new home sales at a 425,000-unit pace last month. When comparing year-over-year for the month of April, sales were down 4.2 percent from last year, regardless of revisions.
A tiny increase in mortgage rates last year coupled with rising home prices, which easily and exceedingly outpaced wage growth (and still is), are weighing on the housing market. Home sales are also being weighed further down by a reported shortage of properties for sale.
Still, some are calling for optimism following the report.
A report from the National Association of Realtors Thursday showed existing-home sales increased in April and inventory was measured at the highest number in nearly two years.
On affordability, according to Freddie Mac, the fixed 30-year mortgage rate fell to an average of 4.14 percent this week, almost seven-month low and down from an average of 4.20 percent the prior week.
As far as regional data, new home sales increased in the Midwest to their highest level since November of 2007, while also rising in the South. However, in the West sales were flat. On the other side of the country, the Northeast, sales saw their largest decline since October 2012.
The inventory of new houses on the market increased 0.5 percent to 192,000 units, which is the highest level since November of 2010. While the stock of new houses on the market has come off a record low hit in July 2012, it remains less than half of its pre-recession level.
At the same pace seen in April, it would take roughly 5.3 months to clear the supply of houses on the market, down from 5.6 months in March. With inventories increasing, the median price of a new home last month fell 1.3 percent to $275,800 from April last year.