Sales of new homes fell short of expectations in March, the Census Bureau reported Monday morning, with new single-family homes going at a 511,000 annual rate after selling at a 519,000 annual clip the month before. The decline was the third straight monthly drop in sales.
Economists had expected the market to heat up to 522,000 in sales.
New home sales are up over 5 percent on the year, but that improvement is still short of what investors and economists at the Federal Reserve and elsewhere would like to see at this stage of the economic recovery. New home sales remain well below the pace that was normal from before the crisis and before the housing bubble, when a million new home sales each year was the norm.
New home sales have been held back because of a slump through the West. While sales have taken off in the rest of the country throughout the past year, they have decline by a fifth in the West.
Prices have moderated. The median price of houses sold in March was $288,000, down from February and from a year earlier. There were also more homes available, enough for nearly six months at the current sales rate. Rising supply in recent months should put downward pressure on home rates.
Quicken Loans vice president Bill Banfield said that the increase in supply “will help consumers with more choices in their home buying search,” while calling the report overall a “mixed bag.”
Along with easing in prices, interest rates remain low, with the rate on a typical 30-year fixed-rate mortgage at just under 3.6 percent, a rate that reflects the overall low-interest rate environment in the U.S. Whether potential buyers are able to fully take advantage of those rates, however, is a hotly debated topic, with mortgage brokers criticizing the government for post-crisis mortgage rules they say are inflexible and forcing certain otherwise creditworthy applicants to the sidelines.
While new home sales disappointed slightly in March, sales of existing homes rebounded in the month. The National Association of Realtors reported that sales of previously-owned homes rose to 5.33 million in the month.
While fewer new homes are sold in any given month or year, the number is more closely watched by investors and policymakers because it reflects the prospects for the construction industry as well as for homebuyers.
