The week ended on the most dramatically impressive new home sales numbers in 47 years. March’s 26.9% increase was the biggest monthly sales gain since 1963, taking us to a 411,000 annual rate! Supply dropped to 6.7 months, inventories fell to 228,000 and the median price went to $214,000, up 4.3% versus last year. Some put the sales surge to the soon-to-expire tax credit, but the facts remain that the economy IS recovering and homes ARE substantially more affordable!
The day before, March existing home sales came in UP 6.8% at a 5.35 million annual rate, UP 16.1% from a year ago, with all regions showing gains! The existing home median price went to $170,700, UP 0.4% from a year ago. These good numbers reversed a three-month slide and sent the supply of existing homes down to 8.0 months.
The new home sales thus reported were from the Commerce Department, and the existing sales from the National Association of Realtors (NAR).
It’s true, the impressive returns were due in no small part to an improving economy. But more sober heads were quick to remind us that these numbers masked ongoing weakness in the housing market. In fact, they owed much to the $8000 tax credit, expiring in a few days, and mortgage rates held artificially low for five quarters — near 5.0% — by the Fed.
New homes are selling too slowly, facing as they do bargain prices for existing homes, while existing homes must compete with a huge overhang of foreclosures. In the Boston metro area, at least, pickings are slim for buyers, as prospective sellers bide their time. The housing market is not out of the woods yet, by any means, the grayheads warn.