US: New Home Sales Soar

US new single-family home sales have hit a 13-month high in April 2023, according to a report by the US Department of Commerce.

US new single-family home sales have hit a 13-month high in April 2023, according to a report by the US Department of Commerce. The persistent shortage of available pre-owned homes has been driving buyers towards buying new homes instead, resulting in a boost in sales figures. Sales rose by 4.1% to 683,000 units, the highest level seen since March 2022. At the same time last year, new home sales had increased by 11.8%. The median price of new homes in April was $420,800 per unit, which was a drop of 8.2% from the previous year.

The housing market is still depressed overall, but the shortage of pre-owned homes has been a saving grace for builders. According to the National Association of Realtors (NAR), the number of existing homes on the market is 44% below pre-COVID levels. The US Department of Commerce has also released data showing that the number of permits to build single-family homes in April rose to a seven-month high. This increase in permits, coupled with builders' confidence rising to a 10-month high in May 2023, indicates that there is no sign that the recent tightening of credit conditions is weighing on the housing market.

The US economy is showing signs of momentum, with figures showing a recovery in factory production, strong retail sales, and a labor market recovery. Despite growing recession forecasts in the second half of 2023, reports such as this highlight that the US economy appears to be regaining momentum, at least for the time being. For those in the market for a new home, the increase in sales figures highlights that now could be a good time to invest.