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Analysts at Nomura note that the US new home sales declined 1.5% m-o-m to 662k saar in April from 672k saar in March, modestly below expectations factoring in revisions (Nomura: 685k, Consensus: 680k).

Key Quotes

“Sales in the West fell notably in April, as we expected, after an unsustainably sharp increase in March. Sales elsewhere rose steadily in April. Annual revisions by the Census Bureau lowered the sales pace in Q1, bringing the Q1 quarterly average to 655k (previously reported as 668k) unchanged from the pace in Q4. As sales in Q4 were temporarily boosted by pent-up demand following major hurricanes, the Q1 sales pace suggests healthy momentum.”

“However, while strong job gains and low unemployment supported consumer demand, it is possible that some of the momentum was driven by consumers who rushed to “lock in” current levels of mortgage rates, which have been rising and are widely expected to move up in the near term.”

“Separate, while affordability continues to be an issue in a housing market short on supply, expectations of sustained home price appreciation may cause some consumers to move forward with current buying plans now before prices increase further.”

GDP tracking update: The downward revisions to new home sales in Q1 suggest modestly less momentum for brokers’ commissions (a component of residential investment) in Q2, but the overall impact was muted. After rounding, our Q2 real GDP tracking estimate remains unchanged at 3.5% q-o-q saar.”