Market Recap: Existing and New Home Sales Disappoint, FHFA House Price Index Improves
This week, mortgage rates hovered year-long lows. New home sales and existing home sales flattened, each declining month-over-month but still improving year-over-year. The Federal Housing Finance Agency (FHFA) house price index appreciated slightly.
New home sales retreated from last month’s ten-year high, dropping 11.4% month-over-month to a level of 569,000. However, this figure is 0.5% higher year-over-year. In total, new home sales are approximately 13% higher in Q1 2017 compared to the same time last year. The median sales price for a new home decreased from $318,700 to $309,200 and inventory on the market increased from 4.9 months’ worth to 5.7 months’ worth. Last week, homebuilders reported a confident housing outlook and demand for new homes remains strong.
In March, he FHFA house price index appreciated 0.6% month-over-month and 6.2% year-over-year. The Pacific region drove gains, up 1.4% month-over-month and 7.9% year-over-year. The Mountain states and Mid-Atlantic region also increased, but more moderately. As demand continues to outpace supply, prices are expected to appreciate.
Existing home sales took a downturn in April, dropping 2.3% month-over-month to a rate of 5.57 million. Housing inventory did increase, up 7.2% month-over-month, but down 9.0% from this time one year ago. The market has faced a shortage in available homes for sale, driving prices up and shortening time on the market.
Homebuilders are struggling to replenish inventory due to labor and land shortages and increases in building materials. These inventory constraints may cause sharper price appreciation. However, rates remain historically low.
Sources: Bloomberg, MarketWatch, Mortgage News Daily, Reuters