China real estate sales decline narrows, recovery signals in key cities strengthen
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China real estate sales decline narrows, recovery signals in key cities strengthen
Citi believes nationwide real estate investment and new starts remained weak in April, but the decline in residential sales was the smallest in 11 months, while new home and existing home transactions in key cities continued to improve in April and early May; the sector should continue to be positioned around recovery.
- Residential sales fell 6% YoY in April, the smallest decline in the past 11 months; commercial housing sales area fell 9% YoY, slightly narrower than the 10% decline in March.
- New starts fell 27% YoY in April, a wider decline than the 17% drop in March; completions fell 19% YoY, broadly flat versus March.
- Real estate development investment fell 20% YoY in April, weaker than the 11% decline in March; cumulative real estate development investment in 4M26 fell 13.7%.
- In the first two weeks of May, existing home transactions in 18 cities rose 30% YoY and new home transactions in 34 cities rose 8% YoY, showing that the recovery in key-city transactions is continuing.
- The report maintains a positive view on sector recovery, with top picks COLI, Jinmao, CRL, Poly Property, and Seazen, and is also positive on Beike as a beneficiary of rising existing home transactions.
Report interpretation
Overview
This report tracks China's April NBS real estate data and high-frequency city transaction data. At the national level, investment, new starts, and land sales remain under pressure, but the sales decline has narrowed and month-on-month pressure on home prices has eased, while improvement in new home and existing home transactions in key cities continued into early May. Citi believes the recovery is expanding from tier-1 cities to more tier-2 cities, and spreading from the existing home market to the new home market and from a small number of developers to a broader group of developers.
Core views
The core views include: first, national real estate fundamentals remain divergent, with investment and new starts still under pressure but the sales decline narrowing; second, improving transaction volumes and declining listings in key cities support price stabilization; third, local policy easing is strengthening upward momentum after signs of market repair had already appeared, rather than merely acting as passive support; fourth, sector share prices may face profit-taking after a sharp short-term rally, but the medium-term recovery logic remains intact.
Analysis framework
The report combines April NBS data on real estate investment, starts, completions, sales, inventory, and home prices, weekly transaction data for new homes and existing homes in key cities from WIND and CREIS, and land transaction data from CREIS 300 cities and Ministry of Finance land transfer revenue data, to cross-assess nationwide real estate pressure and the strength of recovery in core cities.
Methodology notes
Use NBS data to measure changes in nationwide real estate investment, starts, completions, sales, inventory, and home prices.
This framework is suitable for observing demand, supply, and investment cycles at the national level, but the report also supplements it with high-frequency transaction data from key cities to assess localized recovery.
Observe whether the market recovery is continuing through weekly transaction volumes of new homes in 34 cities and existing homes in 18 cities.
The report emphasizes that new home and existing home transactions posted year-on-year growth in the first two weeks of May, with growth covering major tier-1 and tier-2 cities, which is important evidence for judging the spread of recovery.
Use land transaction area, transaction value, and government land transfer revenue to measure developers' willingness to acquire land and fiscal pressure on local governments from land sales.
Land transaction area and value in CREIS 300 cities still declined sharply in April, while Ministry of Finance data showed land transfer revenue fell year-on-year in 1Q, indicating that the investment side and land market have not yet recovered in tandem.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- China real estate sectorSubject of the report
- Strengths
- Improving new home and existing home transactions in key cities, with policy easing reinforcing recovery expectations.
- Weaknesses
- Nationwide real estate development investment, new starts, and land sales remain in clear decline.
- Comparison
- Key cities are performing better than the national average, and existing home improvement is ahead of new homes, though the new home market has also shown signs of broadening since April.
- Risks
- A pullback after overly rapid short-term share price gains, unsustained transaction recovery, and weak household credit demand.
- COLITop pick
- Strengths
- The report says its 4M26 sales achieved growth and it fits the stock-picking direction of land acquisition growth and sufficient 2026E resources.
- Weaknesses
- The report does not provide detailed single-company financial breakdowns.
- Comparison
- Along with Jinmao, it is one of the key recommended developers with 4M26 sales growth.
- Risks
- Sector recovery weaker than expected or diminishing policy effectiveness.
- JinmaoTop pick
- Strengths
- The report says its 4M26 sales achieved growth, and it was already among the developers with sales growth in 1Q26.
- Weaknesses
- The report does not provide valuation and earnings details for the individual company.
- Comparison
- Like COLI, it was relatively ahead in both 1Q26 and 4M26.
- Risks
- Slowing sales growth and weakness in land and investment feeding through to valuation.
- CRLRecommended name
- Strengths
- The report lists it among its top picks and discloses that it is one of the publicly traded stocks for which Citi is a market maker.
- Weaknesses
- The report does not provide a target price or separate rating change for the stock.
- Comparison
- Positioned alongside COLI, Jinmao, Poly Property, and Seazen as recovery plays.
- Risks
- Short-term profit-taking and transaction improvement falling short of expectations.
- Poly PropertyRecommended name
- Strengths
- Included in the preferred list for recovery positioning.
- Weaknesses
- The report does not disclose separate sales or valuation data.
- Comparison
- Benefits alongside other developers from recovery in key cities and policy support.
- Risks
- Weak nationwide investment and land markets may limit sector rerating.
- SeazenRecommended name
- Strengths
- Included in the preferred list for recovery positioning.
- Weaknesses
- The report does not disclose separate operating metrics.
- Comparison
- As a developer name, the investment logic mainly comes from the broadening industry recovery.
- Risks
- Recovery spreading to more cities and the mass market may fall short of expectations.
- BeikeBeneficiary
- Strengths
- The report is positive on it benefiting from rising existing home transaction volume since April.
- Weaknesses
- The report does not provide detailed forecasts for the platform business.
- Comparison
- Compared with developers, Beike has more direct exposure to the recovery in existing home transaction volumes.
- Risks
- A pullback in existing home transactions or a continued decline in listings failing to support prices.
Key data
- April new starts-27% yoyThe decline widened from -17% in March.
- April completions-19% yoyBroadly flat versus -19% in March.
- April residential sales-6% yoyThe smallest decline in the past 11 months.
- April sales area-9% yoySlightly narrower than -10% in March.
- April real estate development investment-20% yoyWeaker than -11% in March.
- 4M26 real estate development investment-13.7%Full-year 2025 was -17.2%.
- 4M26 fixed asset investment-1.6%From the NBS chart title.
- Existing home transactions in 18 cities in the first two weeks of May+30% yoyAbout 25,000 units per week, accelerating further from +9% in April.
- New home transactions in 34 cities in the first two weeks of May+8% yoyAbout 20,000 units per week, maintaining the April pace.
- CREIS 300-city April land sales area/value-29% / -40% yoyMarch was -24% / -40%, respectively.
- Ministry of Finance 1Q land transfer revenue-24% yoyIndicates that land finance and land acquisition remain under pressure.
Impact & implications
For investors, this implies that the trading focus in the real estate sector is shifting from pure policy expectations toward verification through transaction volumes and home price stabilization in key cities. Developers with land acquisition growth in 2025 and ample sellable resources in 2026 are more likely to benefit; improving existing home transactions also favor platform-type names. However, nationwide investment, new starts, and the land market have not yet recovered, so the recovery still needs further verification from high-frequency transactions, prices, and developers' sales.
Risks
- The recovery in transactions in key cities may fail to continue or spread to more cities.
- Household borrowing willingness remains weak, and new RMB loans turned negative, which may limit the recovery in homebuying demand.
- Real estate development investment, new starts, and land transactions are still falling sharply, indicating that the supply side and developer confidence have not yet recovered.
- The effect of policy easing may be weaker than expected, or may only produce a short-term sentiment improvement.
- Sector share prices have already risen rapidly by 25%-30% in the short term, creating profit-taking pressure.
- Tier-3 and tier-4 cities and the national average data may continue to drag on overall sector performance.
What to watch
- Whether year-on-year growth in new home and existing home transactions in key cities continues in May and afterward.
- Whether declining existing home listings continue to support price stabilization or month-on-month increases.
- Whether the recovery expands from tier-1 cities such as Shanghai and Shenzhen to more tier-2 cities.
- Whether the new home market continues to follow improvements in existing homes, and broadens from high-end or small-unit segments to the mass market.
- Whether sales growth among more developers can continue after 4M26.
- Changes in local policy easing, housing provident fund policies, and homebuyer expectations.
- Whether real estate development investment, new starts, land transactions, and land transfer revenue can bottom out.