|Sales Decline In April After Record March
An increase in mortgage rates and bad weather in many areas of the United States contributed to a drop in new home sales in April, falling 11.8% from the month before to a seasonally adjusted annual rate of 1.09 million units. This is the lowest level since November and it was the biggest monthly drop in more than 10 years, the U.S. Commerce Department reports. But the news is not all gloom and doom. Overall, new home sales are 18% above last year and prices have been rising steadily across the United States.
Although the drop in new-home sales was larger than economists were forecasting, the housing market remains in good shape. The National Association of Realtors reports that sales of used homes-the biggest slice of the housing market-posted its second-best month on record in April.
Some economists and agents say the surge in April was the result of a surge in 30-year mortgage rates, which jumped from under 5.5% in March to about 6.3% in April.
Most economists predict home sales will remain healthy nationwide, perhaps even meeting or surpassing the record high sales in 2003.
David Seiders, NAHB’s chief economist, says the drop in new home sales can be mostly attributed to bad weather affecting starts. “The March bulge in home sales apparently was related to an unusual swing in weather conditions, and market fundamentals remain sound despite an increase in mortgage interest rates from their March lows. We’ve been expecting sales to recede from the early-year pace, but we’re forecasting an annual total of 1.113 million units, up about 2% from the record pace in 2003.”
Three regions registered sales decreases for the month. The South posted the largest decline, down 22% from March. The Northeast dipped 2.5% and sales in the West registered a 10.8% decrease for the month. The inventory of new homes for sale in April was 387,000 units, representing a 4.3-month supply at the current sales pace. “The inventory situation still is fundamentally healthy, and the number of completed units in inventory still is historically low,” Seiders says.
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Housing Future Bright For Next Decade
Total home sales will average about 8.5 million per year and home price appreciation will average approximately 5% per year, but could be higher if supply constraints continue to tighten. These and other predictions are contained in a newly released forecast by the Homeownership Alliance. The top economists of NAHB, Fannie Mae, the National Association of Realtors, Independent Community Bankers of America and Freddie Mac all contributed to this groundbreaking report, which is now available online at www.homeownershipalliance.com.