Economy Watch: New Homes Sales Dip Unexpectedly
- Apr 24, 2014
Sales of new single-family housing came in at an annualized rate of 384,000 units in March, according to the Census Bureau on Wednesday. That’s a considerable, and unexpected, drop of 14.5 percent compared with February, and a 13.3 percent decline from March 2013.
Though less than expected, the March total was still higher than during the worst of the recession and its aftermath, when the annualized rate got as low as about 250,000 units. During most of the “normal” economic periods since the Census Bureau started tracking new home sales in the early 1960s, annual rates hovered between 600,000 and 800,000 units. Only during the worst of previous recessions (in the ’70s and ’80s) did the rate ever dip as low as it is now.
The number of new houses for sale at the end of March was 193,000 units, or a six-month supply, the bureau also reported. The median sales price for new houses in March was $290,000, while the average price was $334,200.
Architectural billings drop
The American Institute of Architects reported on Wednesday that its Architecture Billings Index turned negative in March, coming in at 48.8, or down sharply from 50.7 in February. The score reflects a decrease in design services, since any score above 50 indicates an increase in billings. The new projects inquiry index was 57.9, up from the reading of 56.8 the previous month, however.
The index’s drop follows a modest two-month recovery in demand for design services. The index counts as a leading economic indicator of construction activity, since it reflects the nine- to 12-month lead time between architecture billings and construction spending.
“This protracted softening in demand for design services is a bit of a surprise given the overall strength of the market the last year and a half,” AIA chief economist Kermit Baker notes. “Hopefully, some of this can be attributed to severe weather conditions over this past winter. We will have a better sense if there is a reason for more serious concern over the next couple of months.”
Wall Street had a mild down day on Wednesday, with the Dow Jones Industrial Average off 12.72 points, or 0.08 percent. The S&P 500 was down 0.22 percent and, despite Apple’s strong report, the Nasdaq lost 0.83 percent.