New home sales for single-family homes plummeted in the U.S. for the month of March, falling to their lowest level in eight months.
Following a report by the National Association of Realtors yesterday, which found existing home sales in the U.S. fell to their lowest level in more than 1-1/2 years in March, NAR analysts told investors that better data was ahead. However, this latest housing report is a blow to the housing market recovery, anyway you slice it.
The Commerce Department said on Wednesday sales dropped 14.5 percent to a seasonally adjusted annual rate of 384,000 units, the second consecutive month of declines.
February’s sales were revised up to a 449,000-unit pace from the previously reported 440,000-unit rate, but the month of March was widely off base. Economists polled by Reuters had forecast new home sales to be at 450,000-unit measurement last month, and when we compare these numbers to March of last year, sales were down 13.3 percent, the largest decline since April 2011.
While some experts continue to scapegoat the winter weather for the trend line in the housing market, higher mortgage interest rates and a shortage of properties are sidelining potential buyers. Increases in housing prices have outpaced wage increases.
New home sales are counted at the signing of contracts, and sales tanked in the Midwest and the South, while also falling in the West. In the Northeast, however, they rose, which debunks most of the winter weather excuses.
The inventory of new houses on the market increased 3.2 percent to 193,000 units in March, which is the highest since November of 2010. Yet, there are now too few buyers to grab them up. Even though the stock of new houses on the market has come off a record low hit in July 2012, it remains less than half of its pre-recession level, and means nothing economically if there aren’t enough viable buyers.
The lack of buyers is causing supply to become inflated, as March’s weak sales pace increased the supply of houses on the market to 6.0, or the highest level since October of 2011, and up a full point from 5.0 months in February.
The median price of a new home last month rose 12.6 percent to $290,000 from March last year.