Bloomberg News/Landov
The numbers: New-home sales ran at a seasonally adjusted annual 662,000 rate in April.
What happened: Sales of newly-constructed homes dipped in April, the Commerce Department said Wednesday. At a 662,000 selling pace, April was 1.5% lower compared with March, but 11.6% higher than a year ago.
The median forecast among economists surveyed by MarketWatch was for a 682,000 pace.
The government’s home-construction reports are based on small samples and are often revised heavily, making it hard to rely on any one month’s data. Still, for the year to date, sales are 8.4% higher than in the same period in 2017.
But data from each of the last three months were revised downward, suggesting sales momentum may be wavering.
The median sales price in April, $312,400, was 0.4% higher than a year ago. A slightly cooler pace of sales meant that inventory crept up: it would take 5.4 months to exhaust available supply, which is an indicator of a market that’s roughly balanced.
The big picture: Housing-market professionals have wanted a stronger pace of new-home construction for years to fill the gaps in the existing-home market, where inventory remains at multiyear lows. But most builders aren’t “slow-walking” projects, as some analysts have suggested. They’re struggling with higher input costs, thanks in part to the presidential administration’s tariffs. Prices of materials were 4.2% higher than a year ago in April.
The drum-tight labor market isn’t helping.
What they’re saying: Economists were divided on the meaning of the data. “The trend remains favorable,” Renaissance Macro Research’s Neil Dutta said. He noted that sales are higher compared with a year ago even as mortgage rates have jumped.
But in a research note, CIBC’s Andrew Grantham wrote, “The underlying trend doesn’t look quite as positive as it did after the previous release. Months’ supply, at 5.4, is reasonably low but in-line with the average since 2013. The regional breakdown didn’t show any clear sign that adverse weather impacted April’s figures. Instead we could be seeing some early signs that rising interest rates are taking some momentum out of the market.”
Market reaction: Builder stocks rose after the data release. Many, like the SPDR S&P Homebuilders ETF , have lost substantial ground so far this year following a surge in 2017.