New home sales increased 9.6% month-over-month in March to a seasonally adjusted annual rate of 683,000 units (consensus 630,000) from a downwardly revised 623,000 (from 640,000) in February. New home sales activity is being helped by the tight supply of existing homes for sale. Sales activity edged up for the fifth time in the past six months, though revisions have been part of that. On a year-over-year basis, new home sales were down 3.4%.
We have seen in the weekly mortgage applications reports that the pullback in mortgage rates spurred some renewed demand among home buyers. Reality is though with rates over 6.5%, and inflation high- and real-income hurt lower affordability and supply pressures remain for many prospective buyers.
US new home sales for March 2023
- New home sales increased 9.6% month-over-month in March to a seasonally adjusted annual rate of 683,000 units (consensus 630,000) from a downwardly revised 623,000 (from 640,000) in February.
- On a year-over-year basis, new home sales were down 3.4%.
- The median sales price increased 3.2% yr/yr to $449,800 while the average sales price increased 9.9% to $562,400, bolstered by the strength of new home sales in the more expensive Northeast and West regions.
- New home sales month-over-month/year-over-year by region: Northeast (+170.8%; +27.5%); Midwest (+6.0%; -11.3%); South (-5.4%; -3.3%); and West (+29.8%; -9.0%).
- At the current sales pace, the supply of new homes for sale stood at 7.6 months, versus 8.4 months in February and 7.0 months in March 2022.
- The percentage of new homes sold for $399,999 or less accounted for 39% of new homes sold versus 40% in February and 44% one year ago.
New home sales month-over-month/year-over-year by region:
- Northeast (+170.8%; +27.5%)
- Midwest (+6.0%; -11.3%)
- South (-5.4%; -3.3%)
- West (+29.8%; -9.0%)
Note new home sales in the West has the highest concentration of higher-priced homes. The report reflects how rising mortgage rates are impeding sales of higher-priced homes, evidenced by the year-over-year declines in both median and average selling prices.
The report confirms the effect of rates and new home sales remain concentrated in higher-priced homes, as inflation pressures, pushed by supply constraints and labor shortages, are curtailing the building of lower-priced homes and pinching affordability for lower-income buyers.
Existing home sales account for 90% of US transactions and are calculated on a contract close basis. New home sales account for the remaining 10% and are based on contract signings.
The big question is after the surge in rates and slash in rates how much damage has been done with the massive wealth erosion.
From The TradersCommunity News Desk