March New Home Sales: Back on Track

• New homes sales climbed 4.5% in March, to 692,000 units (SAAR) from February, according to the Census Bureau. They were 3% higher than a year ago.
• The median price of new homes sold in March was $302,700 (non-seasonally adjusted), down 4% from February and down 9.7% from a year earlier.
• Inventory dropped 0.3% from February 344,000, and rose 15.8% from a year earlier.

On the heels of a disappointing existing home sales report, the underlying fundamental strengths of the housing market came through clearly in March’s new home sales figures. A strong labor market and sharp mortgage rate declines last month clearly drove buyers into the hands of builders — and importantly, buyers at a variety of price points. Sales in the critical $200,000-$299,000 segment grew from just about a quarter of all sales a year ago (28%) to more than a third in March (34%). Sales volumes through Q1 are higher than at this point last year — and the start of 2018 was strong in itself — and the bump is happening despite still-rising costs of land and lumber. The typical sales price for a new home remains higher than the national median for all homes, but it appears builders are finally proving able to meet buyers at more affordable segments — critical to continued strength.

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