U.S. Housing Market Shows Strength as New Home Sales Beat Expectations in April

Inventory Remains Elevated, but Market Absorption Improves

The number of new homes for sale at the end of April stood at 504,000 units—down slightly from March, but still 8.6% higher than a year ago. More importantly for the market, the months’ supply dropped from 9.1 to 8.1, indicating faster absorption. This drop in months’ supply, paired with rising sales, may point to a stabilizing market where excess inventory is gradually being cleared. Traders focused on housing ETFs and REITs tied to residential development will want to watch for sustained inventory drawdowns as a bullish signal.

Price Action Reflects Firming Conditions

Pricing trends also supported the positive tone. The median sales price rose 0.8% from March to $407,200, while the average price surged 3.7% to $518,400. Though the median remains 2.0% lower than last year, the average price has rebounded above year-ago levels. These shifts may indicate renewed pricing power for builders, especially in mid-to-high-end segments. This could support margins across the sector, particularly if input cost pressures remain stable.

Market Outlook: Bullish Bias for Homebuilders and Rate-Sensitive Sectors

The stronger-than-expected sales data, falling months’ supply, and improving price action point toward a bullish short-term outlook for U.S. homebuilders. Equities tied to residential construction, mortgage origination, and home improvement retail could see tailwinds. For rate watchers, the data may reinforce arguments for a cautious Federal Reserve, as housing resilience complicates the case for imminent rate cuts. Traders should monitor upcoming inflation prints and builder earnings for confirmation.

More Information in our Economic Calendar.