Sales of new single-family homes continued their downward trend for the third straight month in March. According to a joint report from the U.S. Census Bureau and Department of Housing and Urban Development (HUD), the seasonally adjusted sales rate was 763,000, an 8.6% drop from February.
Key findings:
- 763,000 new residential houses sold in March.
- The seasonally-adjusted estimate of new houses on the market at the end of March was 407,000.This represents a supply of 6.4 months at the current sales rate.
- The median sales price of new residential homes was $436,700
- Average sales price was $523,900
The takeaway:
“The combo of high inflation and the Fed’s efforts to tame it pushed mortgage rates higher and reined in housing demand,” said Danielle Hale, chief economist at Realtor.com®. “Even though the Fed only adjusted the target for short-term rates by 25 basis points in March, shifting expectations for more hikes in the near future caused mortgage rates to surge nearly 1 percentage point (91 basis points) over the month as investors realized that Russia’s invasion of Ukraine would not derail the Fed’s plans to raise short-term rates. Of note, February’s home sales tally was revised higher and now shows growth from one year ago, but March figures were down 12.6 percent from one year ago.”
“Looking ahead, with mortgage rates and rents both climbing, this year’s movers are staring down higher costs whether they choose to rent or buy,” Hale noted. “The median sales price of new homes continues to climb, up 21.4% to $436,700. Builders are trying to ramp up entry-level supply priced under $300,000, but they still lag behind last year’s pace, meaning that new homes are likely a viable choice for fewer first-time homebuyers. Only 1 in 7 new homes sold in this price range in March compared with more than 3 in 10 sold in this range one year ago. Keeping a home search on track and under-budget will require focus from homebuyers and renters alike. Make a list of ‘must-haves’ and consider which ‘nice-to-haves’ can be adjusted to find more options to consider.”
“Growing affordability challenges are slowing new home sales and taking a toll on the housing market,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Georgia. “Mortgage rates jumped nearly a full percentage point between the end of February and March and builders continue to face escalating construction and development costs which are putting upward pressure on new home prices.”
