New home stats for March…still not great

The March stats for new home builds offered another mixed bag of results. Single-family homes saw their sales rebound from 2018, though remain below the 10-year average; however, their prices fell in both year-over-year and month-over-month results. Condos saw sales fall again, and while prices were up year-over-year, they were down compared to February, marking the second month in a row that new condo prices have fallen.

new build AprilSource: BILD – Altus, Six Housing Sense

Thanks to the improvement in single-family home sales outweighing the drop in condo sales, March stopped a six-month streak of declining sales compared to the same month the year before. With total sales at 2,314, last month’s totals gained over 2018 by 18%. However, as the graph shows, the volume for the month remains well below the 10-year average, but at least it also offers some reason for optimism for the rest of the year.

new condo aprilSource: BILD – Altus, Six Housing Sense

Isolating the new condo market, we see sales once again falling year-over-year, and they were once again the lowest totals for the month in the last six years. These results represent the 16th out of the last 17 months where new condo sales have dropped compared to the previous year. In fact, through the first three months, condo sales are now down nearly 30% from 2018, which already had low sales itself.

new home prices aprilSource: BILD – Altus, Six Housing Sense

Turning to prices, while only single-family homes are down compared to last year, both segments are down over the past few months. After a brief bounce in November, single-family homes have seen prices fall in each of the past four months. For condos, they experienced a price peak in January, but have since dropped in the past two months. Condo prices may currently be up year-over-year, however, unless there is a course correction in prices soon, new condo prices will likely be down by the summer.

Inventory levels are also working against prices. Inventory growth has been moderate, but coupled with the sales slow down, the months of inventory (MOI) levels remain high. For the single-family homes sector, there is currently 5.8 months of inventory on the market. For condos, however, the segment’s MOI is 8.2, which might explain the price decrease.

The new home sales data comes out so late in the month, its entirely possible direction has already changed for the industry. A full rebound could be in effect this month that we will learn about in May. Right now, however, most of the trends are not positive. The one bright spot is single-family home sales, and even BILD highlighted that the sales total remains below the long run average. Monitoring prices will likely be the most interesting trend going forward. Will both segments continue to see price reductions, or will the correction be temporary, with prices climbing right back?

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