There are many economic reports that garner headlines, including the monthly new construction report, the monthly new home sales report, and the monthly existing home sales report. New construction is important because new homes are jobs multipliers. New homes means new carpet, new landscaping, sometimes new furniture and new appliances and new cars. Existing home sales are important because this allows people to leverage a small down payment and multiply it by the growth rate of the entire purchase price. New home sales are important because they reflect a certain vitality in the economy. This forecast article is written to give an insight as to what to expect from the three reports.
New Home Starts should pop through the 80,000 level. New Home starts have been improving during April since 2011. we normally see month to month growth, as well as April to April growth. We used to see well over 100,000 units started prior to the housing recession. The 80,000 level was the low water level between 1983 and 2007. The annual growth rate and monthly growth rate overlap between 80,000 and 82,000 units.
Units Under Construction should bump higher month to month and April to April. The growth here also makes sense. This is prime time to build, especially if you want a closing between June 30th and December 31st. The data here also indicates that the 1.0 million to 1.2 million range is a strong range for units under construction. We were in this range between 1984-1988 and 2003-2007. Expect a number between 1.12 million and 1.16 million units.
Completions should exceed 80,000 units and may approach 100,000 units. We have been seeing a lack of inventory in the existing home market. We have seen a rise in inventory in the new home market.
The Inventory should rise. Three hundred thousand units should be the minimum amount of inventory that we have across the country. The numbers have been rising since the depth of the housing recession. Things are improving.
Expect starts, units under construction, and completions to rise, returning back to normal.
New homes saw prices faltered last April. We saw a minor plateau of 55,000 units sold during April 2016 and April 2017. The Average sales price last April was down from the April 2016 level. We normally see units sold well about 60,000 units and approaching 100,000 units during April. You can't sell non-existent inventory.
Units sold could smash through 60,000 units sold and approach 70,000. The month to month and April to April growth rates agree that we should see between 68,000 and 69,000 units sold. It could be as low as 61,000 units and as high as 75,000 units. A jump of 10% would get us to 60,000 units.
The average sales price for new construction should return to its rising ways. The March 2018 and April 2017 average sales prices were almost identical. We tend to see some improvement month to month and April to April. It is unlikely that we will see another drop in the April Average Sales Price. Expect the average sales price to be under $384,900 and above last year's $368,600. Expect good news.
Existing Home Sales have been fighting to break through the 500,000 level. The existing home sales data extends back to 1999. The inventory level has been at historically low levels for over a year. We saw the lowest inventory ever during December 2017. The January inventory level was the lowest January ever. The Same is true for January, February, and March.Real estate is supply and demand in action. We had record high inventory during 2007 and the prices started sliding downward. Yard signs are popping up all around the neighborhood and around the country.
The data indicates that we should see over 470,000 units sold this April. While there is a possibility that April sales will falter a little and drop to a level of 429,000 (comparable to 2014,) there is also the possibility that the total sales could exceed 510,000 units (comparable to April 2002 and April 2003.) Weather and availability of homes to purchase have a significant impact on the units sold.
The Inventory level should up higher. Year to year inventory has been declining since February 2015. March to April inventory growth has been slowing. If the monthly inventory grows between 4% and 6% then we should see an April Inventory level between 1.737 million and 1.770 million units. last year we had 1.92 million units for sale.
The average sales price should set another record this April. We have consistently seen the cost of shelter rise by 3% or more, annually, reported in the monthly CPI Inflation report. The March 2018 average sales price already exceeds the April 2017 average sales price. Both the month to month and April to April sales price growth rates project almost exactly the same range for the average sales price this month. The average sales price this year should exceed $294,900 and may reach as high as $304,900.
Do not be surprised if the units sold drops below 450,000 or even below 430,000 units. Do not be surprised if the average sales price is over $300,000. Do not be surprised if there is another story regarding record low monthly inventory.
It's the economy.
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