New Home Sales Spike Much More Than Expected in April
This morning, the Census Bureau and Department of Housing and Urban Development announced that sales of new homes spiked in April. They also revised their March sales estimates upward:
Sales of new one-family houses in April 2010 were at a seasonally adjusted annual rate of 504,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 14.8 percent above the revised March rate of 439,000 and is 47.8 percent above the April 2009 estimate of 341,000.
The median sales price of new houses sold in April 2010 was $198,400; the average sales price was $249,500. The seasonally adjusted estimate of new houses for sale at the end of April was 211,000. This represents a supply of 5.0 months at the current sales rate.
Economists expected some spike, due to the expiry of the Obama administration’s $8,000 tax credit for first-time homebuyers and $6,500 tax credit for some other buyers at the end of April. But the bump was actually higher than most economists thought. A Bloomberg survey, for instance, expected new home sales of 425,000, or 450,000 at the highest. (Also, note that these are not actual April sales numbers, but annualized rates of sale.)
The numbers are good. But two things to throw some cold water on any enthusiasm. First, the tax credits to some extent pushed borrowers from May and June into April and March. If you were considering purchasing a house, you would have rushed to get it done before the tax credit expired — meaning we might see a very precipitous drop in the May numbers. Second, the housing market in general remains very, very troubled on a number of fronts — high inventory, slack demand, falling prices and rising numbers of underwater mortgages.