New home sales for single-family units declined 11.4 percent to the seasonally adjusted annual rate. There were 642,000 units of new home sales in April, the highest since October 2007. April sales are down with just 569,000 units, according to the United States Department of Commerce.
Despite the statistics, BMO Capital Markets Senior Economist Jennifer Lee still sees a robust housing demand. “Demand for housing remains strong and the usual list of support factors hasn’t changed, with the key items being job growth and wage gains,” says Lee.
New homes have sales prices averaging $390,400 as of February 2017, according to the Census Bureau. The median sales price for new residential properties is at $296,200 in the same period.
Decreased Unemployment, Low Mortgage Rates Underpin Strong Demand
Solid labor market shows promise as unemployment rates shrink to 4.4 percent. This positive gain is supporting the demand for housing. More and more Americans are gaining confidence in their works and showing more willingness to spend on buying homes.
Mortgage rates have been hovering close to 4.0 percent in relation to 30-year fixed mortgages. Rates are still at their all-time lows, further helping home sales.
Homebuilding Takes Slow Pace
Wells Fargo SecuritiesSenior Economist Mark Vitner said, ““Builders are running up against shortages of developed lots and having increasing difficulty finding skilled construction workers.”
This trend has homebuilders struggling to meet demand, a survey revealed their sentiments last week. The increasing cost of materials and the difficulty finding a skilled labor force, paired with the shortage of lots is causing the woe. Homebuilding number fell in April, the lowest in five months.