LIVE MARKETS-Glitch or trend? New home sales jump unexpectedly in April

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GLITCH OR TREND? NEW HOME SALES JUMP UNEXPECTEDLY IN APRIL

The sales of newly constructed single-family homes USHNS=ECI unexpectedly surged by 10.9% in April to 743,000 units at a seasonally adjusted annualized rate (SAAR).

That's 7.2% north of the 693,000 analysts expected.

Delving into the Commerce Department's report, the midwest led the way, jumping 35.5%, helping to offset the 14.8% decline in the Northeast.

At last month's sales pace, it would take 8.1 months to sell every new home on the market, down from 9.1 months in March. That's the tightest supply reading since September.

The average sale price rose by 3.7% to $518,400.

The robust upside surprise stands in contrast with the National Home Builder's Association's dour homebuilder sentiment reading for May, and April's 4.0% drop in building permits.

Mortgage rates remain elevated amid broader economic uncertainty, driving down demand for loans to purchase homes, along with traffic of prospective buyers.

On top of that, tariffs stand to put upward pressure on building supplies, adding yet another headwind to the new homes space.

"Expect a downward trend ahead," writes Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, who calls this month's jump in new home sales a "statistical illusion."

"Surveys of consumers’ confidence show people are more worried than usual about losing their jobs," Tombs adds. "The expected single-family home sales index of the NAHB survey fell to just 42 in May—the lowest since November 2023."

(Stephen Culp)

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