Home Sales Unfazed by Spring Snow and Rising Rates

New home sales continue to improve after grim reports in December and January.  New home sales posted a solid gain in March, and revisions to the February data also resulted in a positive outcome during the month.  Those sales, reported by the U.S. Census Bureau and the Department of Housing and Urban Development on Tuesday, bested analysts' expectations and put sales well ahead of those in 2017.

Sales of newly constructed single-family homes were at a seasonally adjusted annual rate of 694,000 in March compared to the revised rate of 667,000 in February, a 4.0 percent increase.  Even better, the revision to February numbers was significant, up from the original report of 618,000, originally reported as a 0.6 percent month-over-month loss. That number had been viewed as good news, after drops of 7.8 percent and 9.3 percent in December and January respectively.  The February revision and the strong March report have now pushed the year-over-year increase up 8.8 percent when compared to March 2017.  

Analysts polled by Econoday were looking for sales in the range of 620,000 to 687,000.  The consensus estimate was 630,000.

On a non-seasonally adjusted basis there were 68,000 new homes sold during the month compared to 56,000 in February.  Year-to-date through March sales total 172,000 against 156,000 during the same period in 2017, an increase of 10.3 percent.  The year-to-date numbers are a recent addition to the new home sales report.

The median price of a home sold during the month was $337,200 and the average price was $369,900.  Prices in March 2017 were $321,700 and $384,400 respectively.

There were an estimated 301,000 new homes available for sale during the month, the same number as in February.  While the number of for-sale properties was unchanged from the previous month, the uptick in sales lowered the available inventory from a 5.4-month supply to 5.2 months in March.

Freddie Mac's economists pointed out earlier this month that the new home inventory numbers tend to paint a brighter picture than the reality.  The numbers of available homes are concentrated in structures either in the planning stage or under construction. An estimated 62,000 of homes reported for sale at the end of March were complete while construction had not begun on another 62,000 and 177,000 were being built.

The increase in national sales was even more positive given the nosedive in the Northeast.  Sales of new homes in that region were down 54.8 percent for the month and 52.5 percent for the year.  The Northeast's number were understandable after the series of severe snowstorms that rolled through much of the region in March.  The Midwest also lost ground, with a decline of 2.4 percent in sales when compared to both the January 2018 and February 2017 reports.

The South managed an 0.8 percent increase in sales when compared to February and those sales were 10.4 percent higher year-over-year.  Sales in the West rose 28.3 percent compared to January and were up 24.7 percent year-over-year.