After revising estimates back to January, April brought an increase in new residential sales, according to new data from the U.S. Census Bureau and the Department of Housing and Urban Development.
Sales rose by 4.1% to a seasonally adjusted annual rate of 683,000, compared to March’s 656,000, revised down from 683,000.
Sales were up 11.8% from the same time last year, which saw an annualized rate of just 611,000.
The seasonally‐adjusted estimate of new houses for sale was 433,000, representing a supply of 7.6 months at the current sales rate.
The numbers are surprising, as analysts had expected a decline.
The likeliest culprit is continuing stock shortages. New home sales have soared as existing inventory dwindles but buying a newly built home is still out of reach for many Americans.
Only 35.9 million out of a total of 132.5 million households are currently able to afford a newly built home based on 2022’s median price of $425,786.
Homebuilder confidence rose for the fifth straight month in May, if only slightly.
They remain cautiously optimistic that though costs are high, Americans will find ways to finance new homes as existing inventory remains tight. Robert Dietz, chief economist of the National Association of Home Builders said that 33% of homes listed for sale in March 2023 were under construction, far above the 2000-2019 norm of 12.7%.
But prices are weighing on builders, who report reducing prices to increase sales or limit cancellations.
“Our builders probably spend more time apologizing than they do building because they apologize for passing these costs on to consumers,” Jimmy Greene, CEO and President of ABC Michigan, told MLive.
Mortgage rate buydowns have been especially popular. For one example, mega-builder Lennar has offered fixed-rate mortgages near 5% when buyers purchase new construction through its finance arm.
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