Recent reports on housing show weakness despite continued rising prices. New Home sales in March were down 14.5% from February and 13.3% below March 2013. Sales in the northeast were up while the other three regions were all down. The number of homes for sale was up 3.2% and the month supply rose to six, boosted by the weak sales figure. The number of houses for sale has risen slowly over the last year suggesting that inventory may not be an issue. Housing starts were also lackluster, down 2.4% in March from February but up 11.2% from a year earlier. Despite the year over year gain, housing starts remain under one million units at annual rates, a pace that is too weak to meet demographic growth. Existing Home Sales aren’t making up for the new home weakness. Existing home sales were 4.59 million at annual rates in March, down 0.2% from February and down 7.5% from a year earlier. The weakness was in both single family homes and condos and coops. Nationally months of supply is 5.2 months, little changed in the last year.
Interest rates and unemployment are often blamed for sluggish housing numbers. However, mortgage rates haven’t changed much since May last year. The economy and the labor market are improving. Foreclosures continue to decline as the housing markets continues to recover from the financial crisis of five years ago. If higher home prices – up 13% in the last 12 months – are the factor slowing home sales, we may see prices level off and turn down in coming months.