New homes are proving a draw to home shoppers, particularly during the pandemic. Newly built single-family homes increased 0.6% in April, reaching a seasonally adjusted annual rate of 623,000, the U.S. Department of Housing and Urban Development and U.S. Census Bureau reported Tuesday. While sales eked out a monthly increase, they are still 6.2% lower than a year ago.
However, builders point to the unexpected uptick in April, as many companies were shut down and unemployment soared. Builders note that the increase is a potential sign that the housing market is already stabilizing during the pandemic.
“The April data for new home sales show the potential for housing to lead any recovery for the overall economy,” says Dean Mon, chairman of the National Association of Home Builders. “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.”
The April estimates on new-home construction sales turned out to be more positive than forecasts expected, says NAHB Chief Economist Robert Dietz. “The data matches recent commentary from builders and reflects recent gains in mortgage applications,” Dietz says.
Housing inventory levels of new homes edged lower in April to a 6.3-month supply, 3% lower than a year ago. About 78,000 of that total are completed and ready to occupy.
The median sales price for a new single-family home sold in April was $303,900, which is down slightly from $339,000 earlier this year. Median prices were lower due to increased use of builder price incentives in April, the NAHB notes.
Across the country, new-home sales saw the largest uptick last month in the Northeast, an 8.7% increase, followed by a 2.4% increase in the Midwest and South. New-home sales fell 6.3% in the West last month.