New Home Sales Up in March for Second Straight Month

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Pace of contracts for new home sales ROSE 4.0 percent in March to 694,000 (Seasonally Adjusted Annual Rate);
  • Unsold inventory was flat to February at 301,000, computing to a 5.2-month supply
  • Median price of a new home ROSE $11,400 from February to $337,200;
  • Year-year the median price of a new home was up $15,500 (4.8 percent)

Trends:

  • The pace of sales has risen 7.8 percent since December and is up 8.8 percent year-year;
  • The inventory of unsold homes is at its highest level since March 2009 (311,000) the depth of the Great Recession;
  • The dollar increase in the median price of a new single-family home failed to offset the $17,500 decline in median price in January and February;

Data Source: Census Bureau and Department of Housing and Urban Development

Image result for new home sales

So, the obituary for home sale – and building activity – may have been premature.

Despite changes to the tax code discouraging homeownership, contracts for sale of new single-family homes rose in March for the second straight month. This report, which reflects future sales, is probably more significant than the report by the National Association of Realtors which covered closings on sales of existing (pre-owned) homes.

The increase in contracts for the sale of new single-family homes was the sharpest since last November when the pace of contracts rose 15.4 percent, possibly due to concerns about the tax law then wending its way through Congress. At that point the provisions relating to real estate taxes and home mortgage interest were more draconian than they turned out to be.

That’s not to say housing and home building are back to where they were. There still appears to be a reluctance to invest in a new single-family home as suggested by the high unsold inventory. The number of new home completions in March continues to exceed sales adding to the inventory of unsold homes. Inventory as measured by months’ supply also remains relatively low reducing choices for potential m=home buyers.

Hear Mark Lieberman on P.O.T.U.S. (Sirius-XM 124) Friday at 6:20 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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