The following is an excerpt from Amey Stone | April 25, 2016 | Barrons.com |
New home sales in March were a bit weaker than expected, but economists were cheered that prior months were revised higher. Contract signings in March were 511,000 annual rate, seasonally adjusted, down from February’s revised rate of 519,000. Economists were expecting 518,000.
Other encouraging signs for future sales growth, noted by Peter Boockvar of The Lindsey Group:
- Inventory of new homes rose and is now basically back to its 30-year average (existing home inventory is still well below average).
- Average selling prices dipped 1.8%. Boockvar finds that encouraging since there need more lower priced homes for first-time buyers.
Boockvar sums up:
The current level of sales remains depressed at the current annualized rate of 511k compared with the 30 year average of 702k and the peak of almost 1.4mm in July ’05. This of course also implies the enormous catch up potential the industry has. This potential though can only be realized by getting the level of first time households back to its historical range of about 40% from the current 30%. Getting this to happen means building more homes priced below $300k and many below $200k. Hopefully the internals seen under the hood of today’s report is a sign that is beginning to happen. Homes priced below $300k made up 56% of sales vs 51% in February and 48% last September.
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