New-home sales turned in their best month since July as the housing market’s recovery continued to build momentum in March, the Commerce Department reported Tuesday. Sales were up 5.8% from February to a rate of 621,000 and are ahead 15.6% year-over-year.
The month’s figures handily beat analyst expectations of a rate of 580,000 new home sales, MarketWatch noted.
- The median sales price of new homes sold in March was $315,100, up from February’s downward-revised $293,100 and $311,400 a year ago. There were 268,000 new homes for sale at the end of March, or a 5.2-month supply, down slightly from February.
The robust activity in new-home sales last month was mirrored in the existing-home sales market, too. Figures from the National Association of Realtors released last week showed that category up 4.4% from February and 5.9% from a year ago. Inventory of for-sale existing homes continues to shrink, recording a 3.8-month supply in March, while new construction has held steady around five months for the last year.
Two-thirds of real estate agents surveyed by Redfin recently said insufficient inventory was the biggest challenge for owners in their markets looking to sell. The starter-home category has been particularly affected by the slowdown in trade-up activity. Many would-be sellers say they’re concerned about putting their home on the market for fear of being unable to find a suitable replacement property in time.
Key to delivering the inventory needed to ease that price pressure is more new construction activity, which is lagging due to a mix of supply-side issues — like higher material prices, difficulty finding labor and a shortage of lots — and other factors including a renewed rise in mortgage interest rates.
The rate of single-family housing starts and permits dropped off from February to March, though both categories were ahead year-over-year.
Builders like Toll Brothers and Meritage Homes are now looking to the entry-level segment as an opportunity to generate business by providing a product that meets the needs of younger, often first-time buyers looking for a lower price point and generally fewer features.