In the last home sales figure to reflect the home buying tax credit, the masses came out as April New Home Sales, a measure of contract signings, totaled 504k, 79k higher than expected and at the highest level since May ’08. However, as seen with the purchase component of the weekly MBA data, the May data will show a sharp decline. We know a hangover is coming but we don’t know what happens after. Due to the sharp April gain and 16k home decline in the absolute # of homes for sale (the lowest since 1968), months supply fell to 5 from 6.2, the smallest since Dec ’05. This is a healthy backdrop going into an expected short term buying decline but foreclosure inventory is more than offsetting this. Evidence of this competition with foreclosures and other existing homes, the median price fell 9.7% sequentially and 9.5% y/o/y to $198,400, the lowest since Dec ’03, notwithstanding the healthy April sales data.
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