As mortgage rates rose back up to the 7% range last week and home prices remain elevated, market signs don’t necessarily point to significant improvement anytime soon. Despite the challenges, however, new-home sales continue to fight through—posting a strong rise in March.
New-home sales rose 8.8% in March to a rate of 693,000, up 8.3% year-over-year, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This reverses the course of February’s slight 0.3% downturn, and follows the upward trend seen back in January.
“Although consumer demand has been somewhat dampened due to higher interest rates, builders continue to supply new homes to the market to lift inventory to make up for the low resale supply,” said Carl Harris, chairman of the National Association of Home Builders (NAHB). “Rates moving above 7%, however, will move some homebuyers to the sidelines as the spring progresses.”
New single-family home inventory was also strong in March, registering at 477,000 units, up 2.6% from February. This represents an 8.3 months’ supply at the current building pace. NAHB added in a release that data from the National Association of REALTORS® indicated just a 3.1 months’ supply of existing single-family homes in March, with a balanced market holding 5 to 6 months’ supply. Inventory of newly-built single-family homes is up 10.2% on a year-over-year basis.
“Shelter inflation remains the largest, lingering obstacle to lower inflation,” said NAHB Chief Economist Robert Dietz. “More housing supply will ultimately tame shelter inflation growth and lower interest rates. This will improve the cost of financing for land developers and homebuilders and enable more attainable housing supply.”
Regionally, on a year-to-date basis, new-home sales are up 15.1% in the Northeast, 17.8% in the Midwest and 28.1% in the West. New-home sales are down 6.6% in the South.
In addition, the median new-home sale price in March was $430,700, up nearly 6% from February, and down 1.9% compared to a year ago.
“New-home sales continue to be a bright spot in the housing industry,” concluded CoreLogic Chief Economist Dr. Selma Hepp. “Homebuilder confidence and buying incentives are helping to counterbalance high values and interest rates. However, compared to years in the past, new-home sales still aren’t performing as well as necessary to help reduce the high demand for new homes in the near term.”
For the full report, including data tables, click here.
