In five of the past seven months, existing home sales have beat expectations -- but we're still predicting a drop. If our new home sales forecast is accurate, that would bring new homes sales in line with levels seen at the end of 2007.
In each of the past seven months, forecasts have pointed to flat or falling existing home sales in the face of tight for-sale inventory. But in five of those seven months, sales have beat expectations, showing strong month-over-month gains. Again, in April, we expect existing home sales – which the National Association of Realtors (NAR) will report later this week – to edge lower, falling 1.1 percent to 5.65 million units at a seasonally adjusted annual rate (SAAR). However, given recent patterns and a trend toward a high-velocity market – where existing homes sell very quickly after hitting the market – we would not be surprised if our forecast proves too pessimistic.
The Census Bureau will report new home sales tomorrow, and we expect the number of new homes sold in April to increase 2 percent to 634,000 units (SAAR), slightly above March’s strong sales number. If accurate, it would bring new homes sales in line with levels seen at the end of 2007.
On the longer horizon, we expect existing home sales to increase 2.5 percent over the next year to 5.62 million units (SAAR) and new home sales to increase 8.3 percent to 618,000 units (SAAR). We expect the median price of existing homes sold to rise 6.8 percent over the next year to $246,400 and the median price of new homes sold to hold steady around $318,000.
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