China real estate weekly transactions improved, but year to date remains under pressure

Overview

This report is Morgan Stanley's weekly database tracker for China's real estate sector, focusing on primary home transactions, secondary home transactions, project sell-through rates, and secondary home listing price indicators. The report notes that as of the week ended April 5, 2026, weekly sales improved significantly year over year, but part of the improvement was affected by the Qingming holiday calendar effect; on a year-to-date basis, both primary and secondary home sales remained in negative growth.

Core views

The core view is that near-term transaction data have improved marginally, but the sector's fundamentals have not yet confirmed a trend recovery. Primary home sales in 50 cities shifted from -8% year over year the prior week to +21% year over year, and secondary home sales in 10 cities shifted from -3% year over year to +32% year over year; however, year to date primary home sales were still down 21% year over year and secondary home sales were still down 4% year over year. Morgan Stanley maintains an In-Line view on China's real estate sector, implying expected performance over the next 12-18 months broadly in line with the relevant market benchmark.

Analysis framework

The report uses a high-frequency database tracking approach, breaking down weekly primary and secondary home transactions by city tier, and combining project sell-through rates, listing price indices, and week-over-week comparisons to observe demand changes. The focus is not on single-company earnings forecasts, but on judging the overall health of China's real estate sector through transaction, price, and sell-through metrics.

Methodology notes

• Industry high-frequency trackingWeekly real estate database tracker

  Week-over-week and year-to-date year-over-year changes in primary and secondary home transactions, sell-through rates, and listing price indices

  By comparing this week's year-over-year change, the previous week's year-over-year change, and year-to-date year-over-year change, the report identifies the difference between short-term sales fluctuations and cumulative trends.

• Rating frameworkMorgan Stanley Industry View In-Line

  Industry view In-Line

  According to Morgan Stanley's definition, In-Line means the analyst expects the coverage universe to perform broadly in line with the relevant broad market benchmark over the next 12-18 months.

Asset mapping & comparison

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

• Chinese property developer equities

  Correlated with sector operating momentum

  Strengths

  Weekly year-over-year growth in both primary and secondary transactions improved significantly, and second-tier city sell-through reached 100%, indicating demand release at some city or project levels.

  Weaknesses

  Year-to-date primary home sales were still down 21% year over year, and year-to-date secondary home sales were still down 4% year over year, so the cumulative trend has not fully recovered.

  Comparison

  Secondary homes have performed better on a cumulative basis than primary homes. Weekly improvement in primary homes was stronger in third-tier cities, but first-tier city sell-through fell sharply from the prior week.

  Risks

  The Qingming holiday calendar effect may have exaggerated week-over-week improvement; if subsequent weekly data weaken, the market may refocus on soft fundamentals.

• China real estate sector credit and debt-related assets

  Indirectly affected by sector sales proceeds

  Strengths

  If sales improvement persists, it should help developers' cash collections and liquidity expectations.

  Weaknesses

  The report does not provide credit spreads, debt servicing, or financing data, so credit recovery cannot be confirmed based on this week's transactions alone.

  Comparison

  The equity sector view is In-Line and does not signal a strong overweight stance.

  Risks

  Negative cumulative sales growth, price pressure, financing conditions, and company-level liquidity risk may still affect debt asset performance.

Key data

• Weekly primary home sales in 50 cities+21% YoYThe previous week was -8% YoY; for the week ended April 5.
• Year-to-date primary home sales-21% YoYDespite weekly improvement, the cumulative figure remains negative.
• Weekly primary home sales in first-tier cities+28% YoYThe previous week was +4% YoY.
• Weekly primary home sales in second-tier cities+17% YoYThe previous week was -6% YoY.
• Weekly primary home sales in third-tier cities+32% YoYThe previous week was -30% YoY.
• Weekly secondary home sales in 10 cities+32% YoYThe previous week was -3% YoY.
• Year-to-date secondary home sales-4% YoYThe cumulative decline is smaller than for primary homes.
• Weekly secondary home sales in first-tier cities+30% YoYThe previous week was +1% YoY.
• Weekly secondary home sales in second-tier cities+33% YoYThe previous week was -8% YoY.
• Overall sell-through rate54%The previous week was 57%.
• Sell-through rate in first-tier cities7%The report says this was affected by the launch of a suburban project; the previous week was 71%.
• Sell-through rate in second-tier cities100%The previous week was 54%.
• Centaline six-city secondary home listing price tracking index19.1%Unchanged from 19.1% the previous week.

Impact & implications

For investors, the improvement in weekly transactions helps ease concerns about a rapid demand downturn, but because the improvement includes a calendar effect and cumulative sales remain negative, the short-term data are better suited as a marginal monitoring signal rather than as standalone support for a sector trend reversal. The In-Line view suggests a neutral positioning bias, and investors should continue to distinguish the sustainability of sales recovery, city-tier differences, and the quality of individual developers' balance sheets.

Risks

• Weekly data were affected by the Qingming holiday calendar effect, so the short-term year-over-year improvement may not be sustainable.
• Year-to-date primary and secondary home sales are still down year over year, so cumulative demand remains weak.
• First-tier city sell-through fell from 71% to 7%, and the launch of a suburban project may have distorted the sell-through reading.
• The report discloses that Morgan Stanley has or may have investment banking, market making, or other service relationships with several covered companies, and investors should be aware of potential conflicts of interest.
• The research report is based on public information, and data completeness and accuracy remain uncertain.

What to watch

• Whether the year-over-year improvement in primary and secondary home transactions can hold over the next few weeks after stripping out holiday effects.
• Whether the year-to-date sales decline continues to narrow, especially cumulative year-over-year primary home sales in 50 cities.
• Whether sell-through rates in first-tier cities recover, and whether the impact of suburban projects on sales quality diminishes.
• Whether the 100% sell-through rate in second-tier cities can be sustained, and whether it reflects genuine demand improvement or supply structure effects.
• Whether the Centaline six-city secondary home listing price index shows a directional change.
• The impact of policy easing, financing conditions, and sales collections at key developers on sector risk appetite.