Auto Market Weekly Summary

The trend in new daily COVID-19 cases declined last week, but the pause in the administration of the Johnson & Johnson vaccine continued, causing the vaccination pace to slow. Late Friday, the pause was lifted, and Johnson & Johnson vaccines began being administered over the weekend.

Consumer sentiment lost more ground, but economic activity is continuing to pick up. New jobless claims fell again to their lowest level for the pandemic. Home sales trends in March were varied as existing home sales declined again while new home sales increased. Supply continues to be a problem, and prices continue to rise. 

Home sales trends mixed: Home sales trends are starting to diverge between existing home sales and new home sales. Both were severely impacted by the severe weather in February, but new home sales more than recovered, while existing home sales fell again in March. The existing home sales seasonally adjusted annual rate declined 3.7% in March to 6.01 million, which was the slowest pace since August. At this rate of sales, existing home sales were up 12.3% from a year ago and up 14.5% compared to March 2019. Inventory slightly increased in March to 1.07 million units from a record low of 1.03 million units in January and February. March inventory was down 28.2% year over year. 

The National Association of Realtors also reported that 83% of the homes sold in March were on the market for less than a month, and the typical time on the market was 18 days, which was a new record low. The months’ supply of homes for sale increased slightly to 2.1 months and is a third of what is considered normal. The median sales price, now at a record $329,100, represented a 17.2% year-over-year gain. Home sales were down in every region and down the most in the West. 

New home sales, which are based on new contracts signed, increased 20.7% in March, more than offsetting the weather-disrupted decline in February. New home sales improved in every region except for the West. New home inventory was unchanged compared to February but down 7% from a year ago. 

New home supply is tight at 3.6 months but is not as tight as ] existing home supply. In times of tight housing supply, new construction is the crucial relief valve, and new construction is growing. In March, 33% of the new homes sold were homes not yet started, while 40% were under construction, and only 26% were completed, finished units. With the increase in March, new home sales were up 67% from last year and up 46% compared to 2019.

Used-vehicle prices soar: Used-vehicle sales have continued a strong pace that saw March record one of the best sales months in history. With tight supply getting tighter by the day, used-vehicle values continue to appreciate. The increase in the first 15 days of April reflected an acceleration of the increases observed in February and March. 

The seasonally adjusted Manheim Used Vehicle Value Index increased 6.8% comparing the first 15 days of April to the month of March. The non-seasonally adjusted monthly change was +7.3%. Last week saw the highest weekly increase observed yet in Manheim Market Report (MMR) values. Retail prices are also increasing, but the extent of the increase lags the increase in wholesale prices.

Jobless claims fall: Initial jobless claims and continuing claims both fell in the last week of reported data. As of April 10, 3.67 million remain on traditional unemployment benefits, which are limited to at most six months of coverage, but 17.4 million remain on some form of unemployment benefits including pandemic unemployment assistance, which provides coverage beyond 6 months. 

With the American Rescue Plan, pandemic assistance will continue through September, and 12.9 million consumers are receiving it. Initial claims declined last week to 547,000, which is the lowest weekly level for the pandemic and lower than the worst weeks during the Great Recession. Still, this level of claims is higher than the 216,000 weekly average before the pandemic began in early 2020.

Consumer confidence slips: The daily index of consumer sentiment from Morning Consult declined six of the 10 days ending Friday, April 23, so sentiment has lost momentum in the back half of April. However, sentiment is still up 1.2% for the month, following a big 5.7% gain in March. The Morning Consult Index was down 0.4% week over week as of last Friday and is down 11.8% since February 29, 2020.

An Auto Market Report video will be published in Smoke on Cars on Tuesday, May 4.