US new home sales saw a rare 3% jump in April

27 May 2008 18:39  [Source: ICIS news]

WASHINGTON (ICIS news)--US sales of new single-family homes rose 3.3% in April from March to a seasonally adjusted annual rate of 526,000 units, but new residential housing sales are still 42% below last year, the Commerce Department said on Tuesday.

 

However, a leading economist said the new home sales figures may signal that the housing sector is beginning to stabilize, although a return to a healthy home construction market may be delayed until sometime next year.

 

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals and chemicals-based products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

 

The department's new homes market report also said that the supply of new homes on the market fell to 10.6 months’ worth at current sales levels, a decline from the 11.1-month supply seen in March.

 

A 10.6-month supply of new homes for sale represents a major over-hang in the housing inventory.  During normal economic periods the supply of new homes for sale would be six months or less.

 

The department also reported an increase in the mean sales price for April at $246,100 (€ 155,043) and an increase in the average selling price for new single-family homes at $321,000, with both marking a gain of about 10% compared with March.

 

The April average price for a new family home is the highest reported since February 2007, and the mean sales price is the highest since November last year.

 

The increase in new homes sold, the inventory reduction and increasing selling prices might indicate that the long decline in the US housing sector may have bottomed out.

 

“It does seem that the housing market is beginning to stabilize,” said Celia Chen, director of housing economics at MoodysEconomy.com.

 

“This marks the first increase in new home sales in about six months, and the inventory level is down - although still very high - and the median and average new home prices both are showing increases,” she said.

 

“However, if this is the beginning of the end, it will likely be a long ending,” Chen added.  “We don’t expect to see much stronger housing activity until next year, so we’ll probably be bumping along on the bottom here for a while.”

 

The upturn in new home sales follows the department’s report earlier this month of an unexpected 8% increase in housing starts and a nearly 5% improvement in the number of building permits issued in April compared with March.

 

($1 = €.63)

 

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