In this week’s economic review, home inventory continues to play a major factor in holding back home sales despite steadying home prices.
New Home Sales
Sales of newly built single-family homes dropped 1.5 percent in April, though the decline was less than anticipated. A negative in April’s report was the downward revisions to the previous three months.
The number of new homes hitting the market was 0.7 percent higher to 300,000 units. This marks the first month that new home inventory has hit the 300,000 threshold in nearly 10 years.
The median seasonally adjusted price fell 6.5 percent in the month to $312,700, it’s lowest median in a year.
Existing Home Sales
April existing home sales dropped more than expected in the month with a 2.5 percent decline, though March’s sales pace was left unrevised. Year-over-year existing home sales are down 1.4 percent, which is mostly attributed to the lack of supply.
Though the number of existing homes on the market increased nearly 10 percent in the month, with April’s sales pace, it would take just 4.0 months to clear the market’s inventory. Existing home supply has dropped for 35 consecutive months on a year-over-year basis.
On the other hand, the median existing home price has increased 5.3 percent from a year ago. In April, the median price was $257,900, marking the 74th straight year-over-year price gain.
FHFA House Price Index
The FHFA House Price Index posted a small gain of 0.1 percent in March versus expectations for a 0.7 percent increase. The year-over-year rate of home price appreciation dropped to 6.7 percent in March from 7.4 percent in February.
Consumer sentiment was also weaker in the month of May with a final reading of 98. May’s survey indicated that consumers are anticipating smaller income gains than they were a year ago.
This week in the economy:
- As of May 24th, the 30-year average fixed rate was 4.66% with 0.4 points, according to Freddie Mac.
- In the week of May 18th, the purchase sector of mortgage applications 3 percent from the week prior. The refinance index also fell by 4 percent, remaining at its lowest level of mortgage activity since September 2008.
- In the week of May 19th, initial jobless claims increased more than expected with a jump of 11,000.
The economic calendar for the week of May 28th, 2018:
- Tuesday – S&P Corelogic Case-Shiller HPI, Consumer Sentiment
- Wednesday – MBA Mortgage Applications, GDP, ADP Employment Report
- Thursday – Jobless Claims, Bloomberg Consumer Comfort Index, Pending Home Sales Index
- Friday – Employment Situation
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