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Real Time Insight

Housing is finally back in the good graces of Americans. 

In a recent Gallup poll, Americans named housing as the best long-term investment for the first time in 4 years, beating out stocks, bonds, CDs/savings and gold.

But while average Americans may be bullish, the monthly housing data is telling a different story.

March's new and existing home sales were both weaker than expected.

Existing home sales for March fell 7.5% below the pace of a year ago. It was the lowest sales volume since July 2012. It was also below March sales for both 2010 and 2012.

New home sales fared even worse as they fell 14.5% to 384,000 in March from an upwardly revised February number of 449,000. Expectations had called for 455,000.

It was 13.9% below the year ago home sales of 443,000. This was the first year over year DECLINE in new home sales since 2011.

Prior to the housing bust and the Great Recession, new home sales averaged about a million a month so sales are still well below the norm.

Median New Home Price at Record High

Several of the homebuilders have reported earnings this week. Sales are starting to look wobbly in some parts of the country, especially the West.

Meritage Homes reported orders down 32% in Arizona, 25% in California and 12% in Colorado.

Yet, average selling price continues to rise and, across the industry, is at all-time highs. According to the Commerce Department, the median hit $290,000 in March, higher than that at the peak of the housing boom in March 2007 of $262,600.

The three homebuilders who have reported earnings this week also said they still had "pricing power" and reported another big year over year jump in average selling price.

Meritage Homes: Average selling price up 16% to $366,000
D.R. Horton: Average selling price up 10% to $278,900
Ryland: Average selling price up 18.1% to $327,000

The national housing market is now facing sharply higher home prices but weakening sales. Mortgage applications are at 14-year lows despite mortgage rates remaining under 5%, a historically low level.

Is the housing market throwing up a red flag?

Or is this spring slowdown just a hiccup on the continued road to recovery?


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