New Home Sales Rebounded In March

New home sales rebounded in March as an unexpected February downturn corrected.

That’s according to data from the U.S. Census Bureau and the Department of Housing and Urban Development, which reported sales rising by 8.8% to a seasonally adjusted annual rate of 693,000, an increase from the month priors’ revised rate of 637,000.

Sales were up 8.3% from the same time last year.

The increase reverses a surprise downturn the month prior that took analysts by surprise, the first bad news in three months. Existing inventory saw a bump and, being generally cheaper and more attractive to buyers, took a greater share. But as rates keep rising, more and more homeowners are delaying selling, putting new construction front and center.

At the end of the month, 477,000 new homes were for sale, an improvement. At the current sales rate, this represents an 8.3-month supply.

Both the median and average sales price of new houses sold in March were up from February, to $430,700 and $524,800, respectively.

In March, Americans were starting to get used to the current homebuying environment, which saw rates stabilize in the mid- to high-6%s.

But interest rates have jumped to over 7% recently thanks to no-good inflation data. The Central Bank, which previously suggested three rate cuts may be in the cards in 2024, has pulled back from that prediction.

“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year,” Sam Khater, Freddie Mac’s Chief Economist, commented.

This means March’s new home sales boost may not carry over into April. Builder optimism has stalled and new construction saw declines last month.