For the new-home market, data released jointly by the Census Bureau and the Department of Housing and Urban Development show that April's sales fell to a seasonally adjusted annual rate of 569,000, compared to 642,000 in March. The number of new homes for sale increased to 268,000 in April, 11.2% higher than a year ago, while the number of new homes for sale but not yet started was up 42% year over year, although unchanged from the previous month.

“Homebuilders are optimistic about the housing market, but cautious, preferring to sell a home prior to starting construction, and are likely hindered by the shortage of skilled labor to complete construction,” says Kristin Reynolds, chief US economist with IHS Markit. “The share of new homes sold but not started increased 13% in April, to 21% higher than a year earlier.

“Homebuyers are willing to wait for the right home to be built,” she continues. “These new homes already under contract will translate into future building. We anticipate new home sales in 2017 to reach the highest annual pace since 2007.”

SANTA ANA, CA—Whether the metric is existing or new single-family homes, April saw lower numbers compared to March. First American Financial Corp. said Tuesday that its Potential Home Sales model for the month declined 0.2% from March's revised data, while federal numbers on new-home sales for April represented an 11.4% drop from the previous month.

That being said, First American Financial notes that while the existing-home market is still underperforming its potential, underperformance has improved by 84.1% from the year-ago period. “Demand for existing-homes remains strong, as positive economic conditions and the demographic tailwind of Millennial demand continues to grow,” says Mark Fleming, chief economist at First American.

Meanwhile, he adds, “sellers are increasingly unwilling to list their homes for sale. The market faces a 'prisoner's dilemma.' If everyone sells, there will be plenty of supply, but the risk of selling when others don't, the inability to find a home to purchase at the right price, is preventing homeowners from putting their homes on the market. The 'prisoner's dilemma' in housing is restricting supply, causing increased house price appreciation and falling affordability.” In fact, affordability is down 11% compared to last year at this time.

Fleming notes that based on analysis of data from the National Association of Realtors, the average number of days on market for homes sold in April was 73 days, down five days compared to a year ago, and 35 days less than in the buyer's market of 2012. “As the seller's market continues to strengthen, affordability is expected to decline further,” he says. “Yet it's unclear if the declining affordability will begin to curtail demand.”

For the new-home market, data released jointly by the Census Bureau and the Department of Housing and Urban Development show that April's sales fell to a seasonally adjusted annual rate of 569,000, compared to 642,000 in March. The number of new homes for sale increased to 268,000 in April, 11.2% higher than a year ago, while the number of new homes for sale but not yet started was up 42% year over year, although unchanged from the previous month.

“Homebuilders are optimistic about the housing market, but cautious, preferring to sell a home prior to starting construction, and are likely hindered by the shortage of skilled labor to complete construction,” says Kristin Reynolds, chief US economist with IHS Markit. “The share of new homes sold but not started increased 13% in April, to 21% higher than a year earlier.

“Homebuyers are willing to wait for the right home to be built,” she continues. “These new homes already under contract will translate into future building. We anticipate new home sales in 2017 to reach the highest annual pace since 2007.”