In April, the YoY decline in new home sales value narrowed, and prices in tier 1 cities stabilized

Overview

This report tracks sales, pricing, starts, completions, and investment data for China's real estate market in April and the first half of May. The core conclusion is that the YoY decline in nationwide new home sales value narrowed, and sales and prices in tier 1 cities were relatively more stable, but nationwide new starts and real estate investment remained weak, showing a clear divergence in recovery by city tier.

Core views

Nationwide new home sales still declined YoY in April, but the decline in sales value narrowed to 6.5%, better than the 9.6% decline in sales area; both new home sales area and value in tier 1 cities achieved YoY growth, and existing home prices also maintained positive MoM growth. At the same time, residential new starts, completions, and real estate investment continued to decline significantly, indicating that developers' willingness to invest and construction activity remained weak. BofA expects that despite signs of recovery in core cities, nationwide new starts may remain at low levels in 2026, due to factors including a YoY decline in land supply to facilitate destocking and an uneven recovery.

Analysis framework

The report mainly uses National Bureau of Statistics real estate data, primary home transaction samples from 30 key cities, existing home transaction samples from 15 key cities, CRIC contracted sales data for the top 100 developers, and city-tier pricing data for cross-validation. The analysis focuses on YoY sales momentum, MoM price stability, development-side investment intensity, and high-frequency transaction trends in May.

Methodology notes

• Macro and industry data trackingNational Bureau of Statistics real estate data

  New home sales, real estate investment, new starts, and completions

  Uses nationwide data to measure real estate demand, development activity, and investment intensity, making it suitable for judging overall industry conditions.

• High-frequency transaction trackingSamples of new homes in 30 cities and existing homes in 15 cities

  YoY changes in transaction volume in key cities

  Uses city samples to observe short-term transaction trends in the primary and secondary housing markets, and distinguishes between tier 1 and other cities.

• City-tier comparisonPrice changes in tier 1, tier 2, and tier 3 cities

  MoM prices of new homes and existing homes

  Assesses price stability and the degree of divergent recovery through MoM price changes across different city tiers.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China real estate developer stocks

  Industry fundamentals and sales data directly affect valuation and earnings expectations

  Strengths

  The decline in sales value narrowed, and sales performance in tier 1 cities was better than the national average.

  Weaknesses

  Nationwide new starts, completions, and real estate investment are still falling sharply.

  Comparison

  Developers in tier 1 cities or companies with higher-quality project portfolios are relatively more resilient, while companies with greater exposure to lower-tier cities remain under pressure.

  Risks

  If sales improvement cannot be sustained, cash flow and investment recovery may continue to be constrained.

• Tier 1 city residential market

  The strongest-performing city tier in the report

  Strengths

  In April, new home sales area and value rose YoY, and existing home prices were stable MoM.

  Weaknesses

  The increase in new home prices remained small, and the overall recovery is not yet strong.

  Comparison

  Clearly better than price performance in tier 2 and tier 3 cities, and also better than nationwide sales metrics.

  Risks

  If policy support or demand release weakens, transaction and price stability may fall back.

• Lower-tier city real estate market

  Part of the drag on new home transactions in 30 cities and on the nationwide recovery

  Strengths

  The report did not provide evidence of notable advantages for lower-tier cities.

  Weaknesses

  The YoY decline in new home transactions in 30 cities in the first half of May was mainly dragged down by lower-tier cities, while tier 3 city prices continued to fall MoM.

  Comparison

  Weaker than tier 1 and tier 2 cities.

  Risks

  Slow inventory digestion, price pressure, and weak developer willingness to invest may persist.

• Real estate investment and construction chain

  Affected by changes in new starts, completions, and real estate investment

  Strengths

  New starts account for about 50% of sales area, which is theoretically favorable for destocking.

  Weaknesses

  Residential new starts, completions, and real estate investment all declined significantly.

  Comparison

  The demand side is showing signs of improvement in core cities, but recovery on the development and investment side is slower.

  Risks

  Persistently weak new starts may suppress demand for building materials, construction, and related industry chains.

Key data

• Nationwide new home sales area in April同比-9.6%Based on National Bureau of Statistics data.
• Nationwide new home sales value in April同比-6.5%The report title emphasizes the narrowing decline in sales value.
• Nationwide new home sales area and value in 1-4M同比-12.5%和-15.9%On a cumulative basis, performance remained weaker than April's single-month sales value reading.
• Primary home transaction volume in 30 key cities in April同比-2%Sample tracked by BofA.
• Contracted sales value of the top 100 developers in April同比-10%Based on CRIC data.
• New home sales area and value in tier 1 cities in April同比+4%和+3%Tier 1 cities clearly outperformed the national average.
• Existing home transaction volume in 15 key cities in April同比+10%Transactions in the secondary market improved.
• Residential new starts in April and 1-4M同比-28%和-23%The development side remained weak.
• Residential completion area in April and 1-4M同比-22%和-26%Completion activity continued to decline.
• Real estate investment in April and 1-4M同比-18%和-13%The decline in real estate investment remained large.
• MoM existing home prices in April一线+0.4%、二线-0.2%、三线-0.3%Price performance in tier 1 cities was relatively stable.
• MoM new home prices in April一线+0.1%、二线-0.1%、三线-0.3%New home prices in tier 1 cities rose slightly.
• Existing home transaction volume in 15 cities as of May 16同比+17%Among them, tier 1 cities were +23% YoY and other cities were +13% YoY.
• New home transaction volume in 30 cities as of May 16同比-4%Tier 1 and tier 2 cities were +7% and +5% YoY, respectively, but lower-tier cities dragged down the overall figure.

Impact & implications

The implications for China's real estate equities are differentiated: improving transactions in tier 1 cities and the existing home market help market confidence and destocking, but declines in nationwide new starts, completions, and investment show that developers' cash flow, land acquisition, and construction chains remain in contraction. Investment judgments are more likely to focus on city tier, asset quality, and the sustainability of sales recovery, rather than simply betting on a nationwide recovery.

Risks

• The nationwide recovery is differentiated; improvement in tier 1 cities does not mean the national market is stabilizing in sync.
• Continued declines in residential new starts may lead to a further widening in the drop in real estate investment.
• Transactions and prices in lower-tier cities remain weak and may continue to drag on nationwide sales and inventory digestion.
• A YoY decline in land supply helps destocking, but may also limit the recovery of subsequent new starts and development investment.
• The report does not provide stock ratings or target prices, and industry data cannot be directly equated with a single-stock investment conclusion.

What to watch

• Whether primary and secondary home transaction volumes can sustain the mid-month improvement trend through the full month of May.
• Whether MoM prices for new homes and existing homes in tier 1 cities continue to stabilize.
• Whether transactions in tier 2 and tier 3 cities improve, and whether the drag from lower-tier cities eases.
• Whether the declines in residential new starts and real estate investment continue to widen.
• The dual impact of shrinking land supply on inventory digestion and future new starts.