Weekly Economic Update-Spring Sales Spring

Even though some parts of the country are convinced winter will never end, home sales seem to be getting in the mood for spring. Both new and existing home reports posted decent numbers, strong enough to boost new home sales ahead of last year and bring existing sales close to that level.

Home prices (yawn) continued to increase at about the same pace as in previous months. There were two February price reports out this week, both showing strong month-over-month and annual gains.  

Each month the housing news seems to hit all at once and this was April’s big week. First were March home sales, new and existing. Both held their own, looking Spring Market-like despite unseasonal weather and tiny inventories. Rising prices provided the second piece of the week’s news, although it wasn’t terribly newsy.

Existing home sales eked out a small increase of 1.1% to a seasonally adjusted annual rate of 5.60 million units. It was the second straight increase, building on a 3.0% February gain. Still, it wasn’t enough to catch up to the 2017 numbers. Sales were down 1.2% year-over-year.

The bright spot in the report was existing condo sales. They had performed poorly enough in February, down 6.5%, to be singled out as a problem by the National Association of Realtor’s chief economist Lawrence Yun. He noted a larger inventory of condos “would provide a helpful transition for first time buyers to enter the housing market.” Those sales jumped in March, rising 5.2% although not quite erasing the previous month’s loss or catching sales up with the prior March numbers. They remain down 3.2% year-over-year.

New home sales posted a substantial improvement and did so on two fronts. First, March sales were up by 4.0% from February, to a seasonally adjusted annual rate of 694,000 units. Second, sales in February had been reported down for the third straight month, although much less so than the disquieting aggregate decline of over 17% in December and January. This week the February number was substantially revised with the addition of an annualized 48,000 units. This turned the earlier reported 0.6% loss into an increase and, with two consecutive strong months in the bank, year-over-year sales are now up 8.8%.

New home sales seem especially positive since they had to overcome a plunge of more than 50% in the Northeast region, likely weather related after the series of March blizzards that rolled through the region. Strangely the weather didn’t seem to affect existing sales, which performed well in the region. Results in the West were mixed; existing home sales were down 3.1% from February while new home sales gained 28.3%.

No Surprises

There were two February price reports, and just more of the same steady gains. The S&P CoreLogic Case-Shiller National Index added 0.5% from January and the annual increase from February 2017 was 6.3 percent. This was 0.2 percent greater than the January-to-January appreciation.

The February House Price Index from the Federal Housing Finance Agency posted a 0.6% change from January and 7.2 percent compared to the previous February

04.27.2018

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