Friday, April 23, 2010

New Home Sales Surge Upward 26.9%; Prices Up 0.4%

After falling heavily for four months, new home sales surged upwards by 26.8% March, to an annualized pace of 411,000 units. This was the largest single-month increase since data has been collected over the past 47 years. The huge jump in sales reversed the sales pace decline over the prior months placing the level back to the point of its recent peak in October.

The huge jump in sales is likely in part due to temporal shifting effects. A significant portion of sales that would have occurred in February were pushed to March due to the snow storms. Also, the homebuyer credit comes to an end in April, so there is likely some pulling of sales forward as buyers seek to take advantage that benefit.

From a year prior, sales were up 23.8%, the first year-over-year increase since 2006. With the jump in sales, the median sales price rose 0.4%. From a year prior, prices were up 4.0% from a year prior.

At the current sales pace, the months supply of inventory of homes for sale dropped significantly to 6.7 from 8.6. This ratio is now approaching the historical norm of about 4.5 to 5 months; however, it still has some distance to go. Before new home prices solidly form a bottom, it is likely that the inventory ratio will have to approach this level.

10.04.23 (Source: Census Bureau)

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