It still has that new home smell.
The new home sales monthly report from the U.S. Census Bureau came out today, and was more or less in line with expectations. The report found that sales of new one-family homes in April increased nearly 15 percent from March 2010, and almost 48 percent from April of 2009. The median sales prices of new homes was $198,400, while the average sales price was $249,500. 211,000 new homes were for sale by the end of April, a five month supply at the current sales pace.
In order to qualify for the first-time home buyer tax credit, buyers needed to have a binding contract in place prior to April 30. They would then have until June 30 to close on the sale. New home sales are recorded at the time the contract is signed, which accounts for the large surge in April. Expect to see new home sales decline in May as a result.
It will be very intriguing to see what happens to the housing market as the summer rolls on. This morning’s report about declining purchase applications indicates that we can expect home sales to fall off in the second half of the year, if everything remains the same. If substantial job creation occurs, or if the government re-institutes some form of stimulus for the housing market, conditions could change very quickly.
As of this time, many economists are predicting there will be a general slow-down of the economy in the second half of the year. Yesterday’s Case-Shiller House Price Index raised fears of a double dip in the housing market due to a general weakening in prices. At the same time, the industrial sector of the economy is booming, and significant job creation has occurred the last several months. One thing we can be sure of is that it will be an interesting summer for market watchers.
What do you think will happen later this year? Let us know in the comments section.
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