Sales of new construction single-family homes across the country rose 0.6% in April, according to new data released by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
While it’s still 6.2% lower than sales of new single-family home in April 2019, the small increase from March is a sign that the housing market is beginning to recover as states reopen after coronavirus-related lockdowns.
“The April data for new-home sales show the potential for housing to lead any recovery for the overall economy,” said National Association of Home Builders Chairman Dean Mon in a statement. “Because the housing industry entered this downturn underbuilt, there exists considerable pent-up housing demand on the sidelines. The experience of the virus mitigation has emphasized the importance of home for most Americans.”
NAHB’s economist also noted that today’s report beat expectations.
“The April estimates from Census came in better than forecast, so there is a possibility of a downward revision in the next release,” said Chief Economist Robert Dietz in a blog post. “Nonetheless, the data matches recent commentary from builders and reflects recent gains in mortgage applications. Despite significant challenges in overall economic conditions, the months’ supply held steady at a reasonably healthy level of 6.3.”
Home prices are yet another metric to examine for signs of market health. While the median sales price of a new construction single-family home decreased in April — $303,900 from $339,000 in April 2019 — that may not be directly correlated to value. The report noted that median prices were lower due to the increased use of builder price incentives.
Meanwhile, annual price growth for all types of properties began to slow in May, according to the latest CoreLogic Pending Index, which showed price growth at 4.4% in May. That’s just slightly below the 4.5% that was reported by CoreLogic for March, confirming the growth deceleration predicted by industry analysts.
Still, while prices are not growing as much or as fast as they did prior to the pandemic, an undersupplied housing market and increased demand are expected to keep prices from dropping.
“The strength in the home price growth is a testament to pent-up demand among millennials who are viewing historically low mortgage rates and lull in the market activity as a unique opportunity to purchase their first home,” said CoreLogic Deputy Chief Economist Selma Hepp. “And while the pandemic has introduced a lot of uncertainty about the economic outlook, the strong demand leading up the pandemic suggests there are many buyers who are still looking to buy a home but are waiting out for the economy to open up. Certainly, recent data suggests home buying activity picking up, which amid low for-sale inventory levels will continue to prop up home prices.”
Still, the country’s record high unemployment rate — currently at 14.7%, the highest level since the Great Depression — has sway over the housing market. More than 20 million Americans lost their jobs in April, forcing many potential buyers out of the market. Those numbers are expected to increase in May.
“The joblessness rate is certain to be higher next month, but soon afterward it will steadily fall. How fast and for how long will be determined by the containment of the virus,” National Association of Realtors Chief Economist Lawrence Yun in a statement earlier this month.