New home sales posted yet another increase in March, rising 9.6% from February to a seasonally adjusted annual pace of 683,000 homes, according to data published on Tuesday by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). This is the fourth straight month of new home sales increases.
On a year-over -year basis, however, new home sales are still down 3.4%.
“Buyers have begun to adjust to the elevated mortgage rate levels, especially in areas where home prices have adjusted downwards to compensate,” Kelly Mangold, the principal of RCLCO Real Estate Consulting, said in a statement. “Despite signs of economic uncertainty in March, which included news of bank failures, buyers are still showing demand for new homes.”
The faster sales pace meant the inventory of unsold new homes continued to fall, dropping from 436,000 in February to 432,000 in March. This represents 7.6 months of supply at the current sales pace.
“The backlog of new construction homes from the building boom across 2021 is working its way to the market, offering fresh listings for buyers who are facing more competition on fewer homes,” Nicole Bachaud, Zillow’s senior economist, said in a statement.
“While still lower than new home sales a year ago, this bump in new inventory is important for keeping the market on a healthy and sustainable trajectory, especially during this spring home shopping season. And although overall home construction activity has slowed in recent months with high rates and slowing demand, slight upticks in single-family home construction could indicate that we will continue to see this flow of new construction homes making its way to the market when it’s needed the most.”
The increased demand for new homes also resulted in an uptick in the median sale price, which rose from $438,000 in February to $449,800 in March.
Regionally, the sales pace was up in the Northeast (65,000 homes), the Midwest (71,000 homes), and the West (161,000 homes) on a month-over-month basis, with the Northeast recording the largest increase at 170.8%.
The South (386,000 homes) was the only region to fall on a monthly basis, recording a 5.4% drop.
On a yearly basis, all regions except the Northeast (+27.5%) recorded drops in annual sales pace, with the Midwest recording the largest drop at 11.3%.