WASHINGTON (AP) — Sales of new U.S. homes fell 1.5 percent in April, held down by a shortage of affordable houses in the most desirable areas and sharp pullback in purchases in the western United States.
The Commerce Department said Wednesday that new homes sold last month at a seasonally adjusted annual rate of 662,000. Despite the setback, new-home sales so far this year are 8.4 percent higher than in 2017.
A solid job market and a shortage of existing homes for sale have led more people into the new home market, even though they are generally more expensive than existing homes. Sales last month occurred disproportionately at the higher end, where profit margins are often greater for builders.
Momentum in the U.S. housing market has overcome even a supply shortage because mortgage rates remain near historic lows. But average mortgage rates have been climbing in tandem with higher rates throughout the economy, reaching a seven-year high of 4.61 percent on a 30-year loan, according to mortgage buyer Freddie Mac.
In April, new-home sales tumbled 7.9 percent in the West and were essentially unchanged in the Midwest and South. Sales improved 11.1 percent in the Northeast. The new-home sales figures are often volatile on a monthly basis and are often revised.
The median sales price of a new home rose 0.4 percent from a year ago, to $312,400. But that masks a broader change last month, which was more sales at luxury prices levels.
Ten percent of new homes purchased in April cost more than $750,000 — twice the percentage of homes bought last year in that range. As a result, the average price of a new home in April shot up 11.3 percent from a year ago, to $407,300.
In a recent survey, 64 percent said they’re anticipating an increase in property values during the next year, according to findings from Gallup. (Click on graphic to enlarge.)
That’s the highest share since the housing bubble in the mid-2000s, when 70 percent were predicting price levels to soar.
Optimism levels vary depending on which pocket of the country you find yourself. Nearly 80 percent of Americans in the West forecast a pricier real estate market in the next year, compared with 64 percent in the South, 58 percent in the East and 56 percent in the Midwest.
The biggest takeaway? “People are very positive about the housing market,” said Frank Newport, editor-in-chief at Gallup.
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Despite rising prices, Americans want in.
To that point, 45 percent of non-homeowners say they plan to buy a house in the next five years. However, just 22 percent of homeowners in that same time period anticipate selling. Such an imbalance between supply and demand could explain in part why property values are on the rise, Newport said.
Of course, while rising home prices are great if you’re a homeowner looking to sell, that trend isn’t fabulous if you’re in the market. Accumulating enough for a down payment becomes that much more of a stretch.
For example, the growth of student loan debt already poses a major barrier to homeownership for many Americans. More than 80 percent of people ages 22 to 35 with student debt who haven’t bought a house yet blame their educational loans, according to the National Association of Realtors.
Regardless, two-thirds of Americans still believe right now is a good time to buy a house, Gallup found.
“The more cynical investor swoops in and buys when prices are at the bottom,” Newport said. “But Americans are not cynical investors.”
Gallup conducted telephone interviews between April 2 and 11, with a random sample of 1,015 adults age 18 and older. The results have a margin of error of plus or minus 4 percentage points.
WASHINGTON – Sales of new U.S. homes jumped 4 percent in March, propelled by a surge of buying in the West.
The Commerce Department said Tuesday that sales last month were at a seasonally adjusted annual rate of 694,000. The two prior months had their sales revised upward with the annual rate being 667,000 in February and 644,000 in January. For the first three months of 2018, sales are running 10.3 percent higher than a year ago.
Homebuyers are snapping up newly built houses as the economic outlook has continued to improve in recent months. Nor have the gains been derailed so far by 30-year mortgage rates climbing to their highest averages since early 2014.
Still, the solid sales growth for new homes also shows that many would-be buyers can’t find existing homes that are available to purchase. Listings for existing homes sank to the lowest levels on record for March, the National Association of Realtors reported on Monday.
New homes tend to cost more than older properties. The median sales price of a new home rose 4.8 percent from a year ago to $337,200, a nearly $87,000 premium on the median cost of an existing home.
Prices for a new home are increasingly concentrated at higher price points. In 2016, 53 percent of new homes cost more than $300,000. That figure climbed to 60 percent for new homes sold in March.
The March increase was driven almost entirely by a 28.3 percent leap in sales in the West. New-home purchases rose slightly in the South, fell in the Midwest and plunged in the Northeast. The new home sales report can be volatile on a monthly basis, causing the numbers to be revised later.