Builders saw more sales of newly built single-family homes last month, as the spring selling season got underway. New-home sales posted a 4 percent increase in March month over month, the U.S. Commerce Department reported Tuesday. New single-family homes reached a seasonally adjusted annual rate of 694,000 units in March, the second highest reading since the Great Recession. The West and South regions of the U.S. led to most of that uptick.
“We saw sales move forward in the West and South regions, which is in line with recent evidence of faster growth in population, employment, and single-family construction in these areas,” says Michael Neal, senior economist for the National Association of Home Builders. “But with nationwide economic growth and favorable demographics, we can expect continued strengthening of the housing market across the country.”
New-home sales rose 28.3 percent month over month in March in the West and were up by 0.8 percent in the South. Sales plunged 54.8 percent in the Northeast and by 2.4 percent in the Midwest. Bad winter weather has been blamed on softening sales in the Northeast in recent weeks.
Nationwide, the median sales price of a new home sold was $337,200 in March. Inventories remain tight at a 5.2-month supply at the current sales pace.
While new-home sales gained some ground last month, economists say that construction in the sector is still not robust enough to catch up to buyer demand. The low inventories of homes for sale—in both the new and existing-home sectors—are prompting prices to soar. The S&P/Case Shiller national index, reflecting February data, showed home prices rising to a near four-year high. National Association of REALTORS®’ median home price data also shows gains of about double the average wage growth.
“Even as the tightening job market is starting to boost incomes, those looking to buy are facing a double whammy of fast rising home prices and higher mortgage rates,” says Lawrence Yun, NAR’s chief economist,
in reaction to the S&P/Case Shiller index’s release on Tuesday. “The way to make housing more affordable is to build more homes, particularly small-sized entry-level homes and condominiums.”
Source: National Association of Home Builders and National Association of REALTORS®
