A 0.6% increase in new-home sales isn’t much, but it suggests that a healthy number of potential buyers is still ready to move forward on their plan to buy a home.
BALTIMORE (AP) – U.S. new home sales ticked up 0.6% in April, a surprising gain amid the coronavirus outbreak that hints at the relative health of potential buyers.
The Commerce Department reported Tuesday that sales of new single-family homes rose slightly to a seasonally adjusted annual rate of 623,000 last month. This followed a decline of 13.7% in March as businesses and schools were closed in an effort to contain the virus. Over the past 12 months, sales are down 6.2%.
COVID-19 disrupted what appeared to be signs of growth in the housing market as low mortgage rates attracted buyers. Stuck in social isolation, they chose last month to purchase homes that have yet to be constructed – a category that surged 26.5% from March and accounted for all of the sales growth in April. Sales of homes already under construction fell slightly, while sales of those already completed declined 13.6% from a year ago.
Realtor.com senior economist George Ratiu suggested that the shelter-in-place orders might have encouraged more people to search for homes to meet their needs in a post-coronavirus economy.
“(T)hey discovered the value of additional space and updated kitchens,” he said. “As remote work policies are being extended into 2021 by a growing number of companies, and likely to become permanent in some cases, demand for home offices is projected to grow. If homebuilders can respond to these shifting preferences, sales of new homes may see a swifter rebound in the months ahead.”
The median price for a new home sold last month was $309,900, dropping 8.6% from a year ago. Prices appeared to dip because fewer homes sold last month in the range of $300,000 to $399,999 and the range of $750,000 and above.
The government report has a high margin of error, so the April figures could be revised in the coming months. New-home sales rose in the Northeast, Midwest and South, but slumped in the West.
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By Josh Boak