New Home Sales, Prices Bounce Back in March

Sales of new single-family homes surged last month and it’s not the only metric to see a major gain from a February cold spell.

New home sales jumped 8.8 percent from February’s revised rate of annual deals, according to a monthly report from the U.S. Census Bureau. The seasonally adjusted annual rate, determined by the bureau and the Department of Housing and Urban Development, was 693,000 units, representing the highest level for the category since September.

The annual rate is also 8.3 percent higher than the rate recorded in March 2023.

The median price of a new home rose to $430,700; that’s an increase of more than $24,000 from February’s revised median, though down 1.9 percent year-over-year.

Meanwhile, the seasonally-adjusted estimate of new homes for sale at the end of March was 477,000, an 8.3-month supply at the sales rate, slightly tighter than February, which had a revised 8.8-month supply at hand.

New homes are benefitting from tight inventory across the market. Inventory for all homes last month was 23.5 percent higher than a year before, according to Realtor.com, but still down significantly compared to 2017 to 2019.

New home sales increased across the four regions last month. The Northeast easily led the way with a 27.8 percent gain from February. The increases in the West (8.6 percent), South (7.7 percent) and Midwest (5.3 percent) were much softer.

Sales for April are usually a boon due to the spring selling season, but they may be affected by the recent rise in mortgage rates, which are back above 7 percent. That hasn’t scared buyers away from applying for mortgages yet, though that may be due to a lingering fear that rates could keep soaring, especially if the Federal Reserve doesn’t cut interest rates later in the year as planned.