As mortgage rates continued to slide throughout March, new data from the Census Bureau and the Department of Housing and Urban Development shows momentum in new home sales growth.
According to their analysis, new home sales increased 4.5% in March from February’s revised rate of 662,000. This means sales of new single-family houses grew to 692,000 in March.
Additionally, March’s levels sit 3% higher than the previous year’s estimate of 672,000.
“Although weaker March existing home sales followed muted February pending home sales, March new home sales data continues to show strength with 692,000 new home sales, up 4.5% from February and above last year’s sales pace,” Realtor.com Chief Economist Danielle Hale said. “This trend supports the fact that lower mortgage rates have started to entice buyers this spring and foreshadows a potential strengthening of pending and existing home sales in the months to come.
The median sales price of new homes sold was $302,700 and the average sales price was $376,000.
“More lower-priced homes, together with lower mortgage rates, point to more opportunity for many more Americans. The overarching problem, though, is too few homes are being built,” Navy Federal Credit Union Corporate Economist Robert Frick said.
“Our current rate is equal to the rate in the early 1970s. For the housing market to return to a normal supply/demand equilibrium–which would also serve to make home prices more reasonable–the three problems constraining builders must be solved,” Frick added. “Those ‘three L’s,’ land, labor and lumber, translate into more land zoned for residential building, more workers in the trades, and cheaper building materials, especially wood.”
The seasonally adjusted estimate of new homes for sale by the end of the month was 344,000 in March, representing a supply of 6 months at the current sales rate.