April Home Sales Show Mixed Signals

Housing showed mixed signals in April, with existing home closings disappointing while new home contracts hit a three-year high. Job market data revealed similar contrasts: new unemployment claims remained low, but ongoing claims reached their second highest level since late 2021. Continue reading for more details.

·      Existing Home Sales Sink to 7-Month Low

·      New Home Sales Surge Past Expectations

·      Continuing Unemployment Claims Exceed 1.9 Million

Existing Home Sales Sink to 7-Month Low

April's existing home closings disappointed, dropping 0.5% from March to an annual rate of 4 million units – the lowest since September and the weakest April since 2009.

Despite economists forecasting better numbers based on March's strong contract signings (Pending Home Sales +6.1% MoM), closings failed to materialize as expected in April. The culprit? A rising cancellation rate affecting 7% of sales in April, potentially explaining the disconnect between strong contract signings and actual closings.

These cancellations may be linked to last month's stock market volatility, with buyers either losing funds earmarked for purchases or hesitating to sell investments during a market downturn.

What’s the bottom line? While inventory grew to 1.45 million units (up 9% monthly and 20.8% yearly), current supply remains well below pre-pandemic levels and far from the 4 million units available during the housing bubble. This persistent shortage, combined with pent-up demand, points to continued home price appreciation.

New Home Sales Surge Past Expectations

New home contracts jumped 10.9% in April, marking the second straight monthly increase. Sales reached 743,000 annual units – a three-year high that significantly outpaced analyst projections of 692,000. Year-over-year growth hit 3.3%.

Despite the median price dropping 2% to $407,200 compared to April 2024, this doesn't signal declining home values nationwide. The median price simply represents the middle point of all homes sold, which fluctuates based on which homes are selling. More transactions occurred in the South's relatively more affordable markets this April than last year, pulling the median figure down even as prices appreciated across the country.

What’s the bottom line? While inventory stood at 504,000 new homes at the end of April (slightly below March’s 507,000), only 117,000 were completed and move-in ready. The remaining homes were either under construction or not yet started. The market still needs more available supply to meet buyer demand, particularly given the historic shortage of existing homes for sale.

Continuing Unemployment Claims Exceed 1.9 Million

Weekly initial jobless claims dipped slightly by 2,000 to 227,000, staying at historically low levels. However, continuing unemployment claims rose by 36,000 to 1.903 million, marking their second highest level since November 2021.

What’s the bottom line? Continuing claims have consistently remained above 1.8 million each week for nearly a year, and have surpassed 1.9 million twice in just the past month. This trend indicates job seekers are spending longer periods between jobs. Companies have reduced their hiring pace as they exercise caution amid economic uncertainty and worries about how potential tariffs might affect business.