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Sales of new homes cooled in April from an 11-year high amid a surge in prices, adding to signs of softness in housing at the start of the quarter.
Single-family home sales fell 6.9% to a 673,000 annualized pace, close to economist estimates following an upwardly revised March reading of 723,000, government data showed Thursday. The median sales price increased 8.8% from a year earlier to $342,200, the highest since December 2017.
Roughly the entire sales decline came in homes priced below $300,000, suggesting a shortage of affordable properties is hampering buyers and the effects of this year’s drop in mortgage rates are waning. Such difficulties indicate residential investment may continue to be a drag on the economy despite steady job and wage gains. While revisions indicate demand for new homes has been overall stronger than previously reported in 2019, the latest data add to a mixed picture of U.S. housing.
Existing-home sales, which make up most of the market, unexpectedly dropped in April, while housing starts rose for a second month and single-family home permits declined. The number of properties sold for which construction hadn’t yet started rose to the highest since 2017, a positive sign of demand. But the number of completed homes on the market increased to the most since 2010. New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close.
A separate report Thursday showed filings for unemployment benefits hit a five-week low in the week ended May 18, falling 1,000 to 211,000. The reading, which may be scrutinized more than usual because it’s the reference period for the Labor Department’s monthly jobs report, suggests the labor market remains historically tight.
Purchases of new homes fell in three of four regions, led by an 8.3% drop in the West. Sales increased 11.5% in the Northeast. Economists in Bloomberg’s survey projected a decline to a 675,000 pace, with forecasts ranging from 625,000 to 746,000. The revised March figure of 723,000 was the highest since October 2007.
The supply of homes at the current sales rate rose to 5.9 months from 5.6 months in March. Thursday’s data, published jointly by the Census Bureau and Department of Housing and Urban Development, reflected annual revisions going back to January 2014. The figures are also often subject to significant revisions each month.