Sales Of New Homes Fall 1.5% In March

Erin Carlyle

Getty Images

Sales of newly-constructed single-family homes fell 1.5% in March, the Commerce Department reported Monday.
The drop continues this year’s ping-pong volley of new home sales: January kicked off the year at at a disappointing pace (a 9.2% tumble from December), but sales rose again in February, only to fall once more last month. March’s new home sales pace was a (seasonally adjusted, annual) 511,000. That’s up 5.4% from March 2015′s estimated (seasonally adjusted, annual) pace of 485,000.
The March numbers fell within the range expected by economists surveyed by Bloomberg ahead of the report.
Last year new home sales were at their strongest pace since the recession. In 2015 a total of 501,000 new homes were sold, compared to only 437,000 in 2014, and so far 2016 is on track to reach an even stronger pace. However, “new home sales still remain about 24% below the 50-year average,” wrote Ralph McLaughlin, chief economist at Trulia, in a note.
The new home sales data counts the number of newly constructed homes with a committed sale each month. Economists view it as a measure of economic momentum and an indicator of future consumer purchases of furniture and appliances. However, due to a small sample size and a margin of error around 15%, the numbers tend to be swing wildly. February’s new home sales numbers were  revised upward to 519,000 from 512,000 in today’s report.
The supply of new homes for sale is now nearing the 6-month inventory level considered a balanced market. At the end of March it stood at 246,000, a 5.8-month supply at the current sales pace.
The median price of a new home sold in March was $288,000; the average sales price was $356,200. The median price was up from February’s $301,400.

New home sales in March were flat in the Northeast, up 18.5% in the Midwest and 5% in the South, and down 23.6% in the Western region of the United States. In February sales fell everywhere in the country, except for a dramatic 38.5% gain in the West.
Sales of new homes represent only about 10% of the housing market and data in the monthly Commerce report is revised frequently (three times), making it a less-reliable measure. By contrast, the steadier Existing Home sales report from the National Association of Realtors tracks the bulk of the market–previously-owned homes, and shows less volatility.