Home US: Lower mortgage rates to support the steadily improving trend in new home sales – Wells Fargo
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US: Lower mortgage rates to support the steadily improving trend in new home sales – Wells Fargo

Today’s New Home Sales report showed that in May sales dropped 7.8%.  Despite the monthly decline, lower mortgage rates and builder discounts have led to an overall improving trend and sales are up 4.0% on a year-to-date basis, explained analysts at Wells Fargo.  

Key Quotes:  

“Despite sliding mortgage rates and a pickup in purchase application activity, new home sales plunged 7.8% during May. That noted, the pace of new home sales remains solid and May’s weak report overshadows an improving overall trend. Sales are running at a 670,000 unit pace over the past three months, well ahead of the 615,000 unit pace averaged throughout 2018.”

“Through the volatility, sales are still up a solid 4.0% on a year-todate basis. We expect lower mortgage rates to continue to support the steadily improving trend in new home sales in coming months, however a surge in activity is unlikely.”

“The median home price fell 2.7% year-over-year to $308,000. Lower new home prices compared to last year reflect steep discounts offered by builders, which has helped bring down rapidly rising inventories.”

“Home price appreciation continues to soften. Reported separately, the S&P CoreLogic Case-Shiller National Home Price Index (HPI) increased 3.5% in April, a slower pace than both the 3.7% rise during March and 6.5% registered during the same month last year. The 20-City Composite Index also showed price appreciation across the country was flat during the month and eased 2.5% over the year. A sharp 0.6% monthly decline in Seattle likely weighed on the topline index, however 16 of the 20 covered markets posted gains during April.”

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