Spring is typically when sales for existing homes take off. The current spring market is not living up to expectations as much as we would like. Sales of existing homes are down 3.3 percent for the month of April compared to March. Three of the nation’s four regions showed declines with the steepest decline in the usually strong South. The Southern region, which is by far the largest region, declined 6.8 percent. The good news is that despite the decline, year-on-year sales remain up 6.1 percent from the 2014.
A positive in the report is that supply increased up to 2.21 million homes versus 2.01 million in March. This rise in inventory, combined with the drop in sales, raises supply relative to sales to 5.3 months from 4.6 months. One more positive in the report is the 4.1 percent increase in the median price to $219,400 which is up 8.9 percent from the same time last year. It is unusual to see prices rise when inventory rises but the increase is a positive indication.
It may be a little premature to determine know for certain, but strength in housing might be shifting from existing homes to new homes based upon the most recent new homes sales data. Home sales data can be volatile from month to month so all we can do is look for patterns as the months pass.
The housing starts report released on Tuesday showed one of the strongest months on record for housing starts and permits. Starts soared 20.2 percent in April to a much higher-than-expected annual rate of 1.135 million. Permits jumped 10.1 percent to a much higher-than-expected 1.143 million. Both readings came in far above the Econoday high-end forecasts. The gain for housing starts is the best we have seen in 7-1/2 years. The jump in permits is the best in 7 years.
Next week there are three significant housing reports to be released, FHFA House Price Index, Case-Shiller Home Value Index, and the New Home Sales Report will complete the picture for the current state of housing when added to the data from last week’s reports.
As many investors expected, the release of the FOMC Minutes on Wednesday confirmed that the Fed is not yet ready to raise interest rates. The Fed has documented that there continues to be signs of some weakness in the economy and there may be a possibility that the economy could be slowing down. It is too early to make the determination but the Fed is keeping a close watch on what is happening. The Fed is committed to not doing anything with rates that could hasten or facilitate an economic slowdown.
This week’s potential market moving reports:
• Monday May 25th – All Markets Closed
• Tuesday May 26th – Durable Goods Order, FHFA House Price Index, S&P Case Shiller Home Price Index, New Home Sales and Consumer Confidence
• Wednesday May 27th – MBA Applications
• Thursday May 28th – First Time Jobless Claims
• Friday May 29th – GDP