The beginning of what is supposed to be the hottest time of the year for the real estate market actually saw a slight decline in sales of one of the most in-demand types of properties: single-family homes. Recent reports show that new single-family home sales dropped in April.
The Decline in New Single-Family Home Sales
According to reports from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, the annual rate of new single-family home sales was at 637k in April. This was a 6.9% decline from the rate in March 2019, coming in after an 11-year high.
Looking at the whole of the US real estate market, new single-family home sales dropped in 3 of the 4 major regions in the nation. The West saw the largest drop (8.3%) while the Northeast actually saw an increase in sales of 11.5%
The median sales price of new single-family houses was $342,200 in April, with an average sales price of $393,700. The median sales price was up 8.8% from this time last year. This is the highest it’s been since December 2017. It’s important to note that the major decline in sales mostly came in the $300,000 price range. This points to the fact that there is a serious shortage of affordable properties for sale on the market. The rising real estate prices could be part of the reason why new home sales dropped last month, in spite of lower mortgage rates.
In regard to the housing inventory, there were 332k new houses for sale on the market by the end of the month. Considering the current sales rate, this amounts to 5.9 months of supply. This is up from a 5.6 month supply in March.
Related: 5 Trends Beginners Need to Know About the Current Housing Market
Key Takeaways for Real Estate Investors
Some investors and property owners panic when sales drop in the market. And while new home sales only make up about 10% of the market, existing home sales also fell in April. If you’re trying to sell an investment property (and your property isn’t in the Northeast), you may see your DOM continue to rise.
However, if you are looking to buy a property, this could be an opportune time. That is if you are looking to buy a rental property and implement the buy and hold strategy. If you’re in the right market, you may find more options due to the slight rise in inventory. You may also find less competition from first-time homebuyers and other property buyers who are being priced out of the market. So, if you can afford to invest in real estate right now, start your property search before we move into the summer season and things inevitably heat up again.
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