Interest Rate Roundup

Friday, April 23, 2010

New home sales explode 27% in March

Yesterday's existing home sales report was pretty good. Now here's what the new home market looked like ...

* New home sales exploded to the upside, soaring 26.9% in March. That's good for a seasonally adjusted annual rate of 411,000 in March, compared with an upwardly revised 324,000 in February. That was also a blow out compared with the 325,000 average forecast -- and the biggest rise in ANY month since April 1963.

* Regionally, sales surged 35.7% in the Northeast and 43.5% in the South. They also gained 4.3% in the Midwest and 5.7% in the West.

* The raw number of homes for sales fell to 228,000 from 233,000 in February. That's the lowest level going all the way back to March 1971. Compared with a year earlier, supply was down 27.2%. The months supply at current sales pace indicator of inventory plunged to 6.7 from 8.6. That's the lowest since December 2006.

* Median prices fell 3.4% to $214,000 from $221,600 a month earlier. On a year-over-year basis, prices were up 4.3%.

I was adamant a year ago that many of my housing market indicators were suggesting a turn was at hand. Not a massive recovery, but a gradual improvement in market conditions. I also argued that more than the tax credit was at work. Cheap homes, low mortgage rates, and a slow-but-steady turn in consumer confidence and employment were helping underpin housing demand.

Fast forward today and all I can say is "Wow!" The March sales figures were an absolute blow out, with sales surging by the biggest margin in 47 years. Inventory for sale declined to the lowest level in almost four decades, while pricing firmed from year-earlier levels. Sure, the tax credit goosed the figures. But again, it is much more than that. In simple terms, housing is a bargain again -- and buyers are responding. That is unambiguously good news for the market going forward.

3 Comments:

  • 7000 more homes sold in March of this year over March of last year.

    Put it in perspective and the blow out you talk about looks pretty small to me.

    Spead that 7000 over the entire country and it is not much of a pop. More like a plop.

    By Anonymous Anonymous, at April 28, 2010 at 7:03 AM  

  • 7000
    This is what I would expect from the expirationn of the home debtor tax credit.

    Plop.

    By Anonymous Anonymous, at April 29, 2010 at 12:49 AM  

  • Mike, I am a big fan of yours. A question for you:

    If you believe the long bond rate is going up big time (which I also believe), how can you at the same time hold a semi-positive view on the housing market? I would expect the price to crash further under the weight of the higher rate. Thanks.

    John

    By Blogger John, at April 30, 2010 at 5:22 PM  

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