Updated: 28-May-09 10:29 ET

April New Home Sales

Updated: 28-May-09 10:29 ET

Highlights

• New home sales for April didn't live up to expectations as they checked in at a seasonally adjusted annual rate of 352,000 units (consensus 360,000).  April sales were up 0.3% from the March level, which was revised lower to 351,000 from 356,000, but were down 34% year-over-year.
• On a regional basis, sales were flat month-to-month in the Northeast and Midwest, up 1.9% in the South, and down -3.8% in the West.  The median sales price increased 3.7% from March to $209,700, yet that was still 14.9% below the median sales price in April 2008.
• The inventory of unsold homes continued to get worked down as it stood at 297,000 units versus 310,000 units in March.  Factoring for the current sales pace, that left the supply of unsold homes at 10.1 months versus 10.6 months in March.

Key Factors

• The new home sales report for April fits in with the view that things are stabilizing.  The 3-month average for January-March was 347K.  Still, it is a sobering reminder that new home sales are a long, long way from being considered robust.  To that point, they were running at an annual rate of 887,000 in April 2007.

Big Picture

• New homes sales are in worse shape than existing home sales.  New homes suffer from a large surfeit of unsold homes and the fact that new homes are frequently bought by first time buyers.  That market is in difficult shape due to credit issues.  Existing home sales are often purchased by more credit-worthy borrowers and can be more broadly in areas where demand is more steady.  The outlook for new home sales will remain poor for some time.