US new home sales and business activity rose to a 13-month high

  • Single-family home sales rose 4.1% in April
  • The median new home price is down 8.2% year over year
  • Business activity rose to a 13-month high in May

WASHINGTON (Reuters) – Sales of single-family homes in the United States jumped to a 13-month high in April, helped by a persistent shortage of previously owned homes in the market and a sharp drop in prices from last year’s highs.

The report released by the Commerce Department on Tuesday follows data released last week that showed a rise in permits for single-family housing construction going forward. With confidence among homebuilders rising to a 10-month high in May, there is no sign yet that the recent tightening in credit conditions is weighing on the housing market, the sector hardest hit by the Fed’s fastest rate-raising cycle since the 1980s.

“Evidence continues to accumulate that the housing market may have largely adjusted to the higher level of mortgage rates, but the decline in median home price is consistent with the hypothesis that home builders may have designed new homes for first-time buyers,” Conrad said. de Quadros, chief economic advisor at Brean Capital in New York.

New home sales increased 4.1% to a seasonally adjusted annual rate of 683,000 units last month, the highest level since March 2022. March sales pace was revised down to 656,000 units from 683,000 units previously reported.

The government has revised sales, inventory and supply data for the months since January 2018.

New home sales are counted when a contract is signed, making it a leading indicator of the housing market. However, it can be volatile on a monthly basis.

Economists polled by Reuters had forecast that new home sales, which account for a small share of US home sales, would drop to a rate of 665,000 units. Sales rebounded 11.8% year over year in April. The median new home price in April was $420,800, down 8.2% from a year ago. Home sales last month were concentrated in the $300,000 to $499,000 price range.

Existing home inventory remains 44% below pre-pandemic levels, according to data from the National Association of Realtors, which also reported last week about rising prices in about half of the country, multiple offers and many homes selling above the list price.

The shortage is prompting buyers eager to take advantage of declines in mortgage rates, keeping builders busy even as the overall housing market continues to slump.

The government reported last week that permits for single-family building rose to a seven-month high in April.

The average rate on a popular 30-year mortgage has been hovering in the middle of its 6.09% to 6.73% range this year, after peaking at 7.03% in late 2022, according to data from mortgage agency Freddie Mac.

New home sales increased last month in the Midwest and South regions, but fell in the Northeast and West.

There were 433,000 new homes on the market at the end of last month, up from 432,000 in March. And at the pace of April sales, it would take 7.6 months for the supply of homes to clear the market, down from 7.9 months in March.

US stocks traded lower. The dollar rose against a basket of currencies. US Treasury bond prices fell.

New home sales

Spring revival

The report added to a resilient labor market and strong retail sales as well as a pickup in factory production suggesting the economy regained momentum early in the second quarter.

That view was underscored by a global survey by Standard & Poor’s on Tuesday showing that the US’s composite PMI output index, which tracks the manufacturing and service sectors, rose to a reading of 54.5 this month. This was the highest level since April 2022 and followed the final reading of 53.4 in April.

It was the fourth consecutive month that the PMI has remained above 50, indicating growth in the private sector.

PMI flash

After last week’s optimistic reports, the Atlanta Federal Reserve raised its GDP growth estimate for the second quarter to 2.9% as an annual rate from 2.6%. The economy grew at a rate of 1.1% in the first quarter.

Most economists expect a recession in the second half of this year, citing the Fed’s 500 basis point interest rate increases since March 2022. Tightening credit conditions and a standoff over raising the federal government’s borrowing ceiling have also raised risks from deflation.

The survey’s measure of new orders received by private companies jumped to 54.3 this month, the highest reading since last May, from 51.9 in April. The service sector led the increase, with service inflation kept high. A measure of the prices factories pay for inputs fell below 50 for the first time in three years. The survey’s measure of the prices businesses pay for inputs fell to 58.5 from 61.2 in April.

Companies also increased staffing, with companies reporting the ease of filling job vacancies.

(Reporting by Lucia Mutecani) Editing by Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

#home #sales #business #activity #rose #13month #high

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top