New Home Sales Jump 4.1% in April

This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.

This morning's release of the April new home sales from the Census Bureau came in at 683K, up 4.1% month-over-month from a revised 656K in March. This is above the Investing.com forecast of 663K and the highest level in over a year. The median home price is now at $420,800, down $35K from March on a nominal basis.

Here is the opening from the report:

New Home Sales
Sales of new single‐family houses in April 2023 were at a seasonally adjusted annual rate of 683,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.1 percent (±11.8 percent)* above the revised March rate of 656,000 and is 11.8 percent (±15.1 percent)* above the April 2022 estimate of 611,000

Sales Price
The median sales price of new houses sold in April 2023 was $420,800. The average sales price was $501,000. [Full Report]

For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

Over this time frame, we see the steady rise in new home sales following the 1990 recession and the acceleration in sales during the real estate bubble that peaked in 2005. Since 2011, we have seen a similar rise that has only recently retracted.

The population-adjusted reality

Now let's examine the data with a simple population adjustment. The Census Bureau's mid-month population estimates show a 78.0% increase in the US population since 1963. Here is a chart of new home sales as a percent of the population.

New single-family home sales are 15.6% above the 1963 start of this data series. The population-adjusted version is 35.1% below the first 1963 sales and at a level similar to the lows we saw during the great recession. Today's 30-year rate is 6.39% (per Freddie Mac).

For another perspective, here is a chart of the median new home sale prices back to 1963, inflation-adjusted. The data source is also the Census Bureau and can be found on the press release and website above. For inflation adjustment, we use the CPI-U, which is the consumer price index for all urban consumers. We've included a six-month moving average for this extremely volatile metric to give us a clearer sense of the trend.

Here's a zoomed-in look since 2000. The latest price of $420,800 is a 7.7% decrease from last month and a 8.2% decrease from April of last year. However, after adjusting for inflation, the monthly change drops to a 8.1% decrease while the annual change drops to -12.5% decrease.

ETFs associated with residential real-estate include: iShares Residential and Multisector Real Estate ETF (REZ).

ETFs associated with home builders include: Invesco Dynamic Building & Construction ETF (PKB), iShares U.S. Home Construction ETF (ITB) and SPDR S&P Homebuilders ETF (XHB).

For additional perspectives on residential real estate, here is the complete list of our monthly updates:

New Home Sales Jump 4.1% in April

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