April 25, 2017 – New single-family home sales represent the number of brand new houses that were purchased or committed to being purchased over the course of a month. This indicator has a trickle-down effect as demand rises for durable goods and consumer spending increases, boosting GDP. It is also a sign of strength in the consumer balance sheet to make the investment.
New home sales rose 5.8% in March, to a 621,000 annualized rate. This came in well above expectations of an annualized rate of 588,000 and February’s downwardly revised 587,000 rate. The median price increased 7.5% for the month to $315,100. Year-over-year prices are up 1.2% while sales are up 15.6%. Sales rose in the Northeast, West, and South and declined in the Midwest. The months’ supply of new homes dropped to 5.2 months from February’s 5.4 months.
A very strong March in new home sales as the 621,000 annualized rate came in significantly above expectations. Sales rose to their fastest pace since July last year when sales reached their highest levels since the recovery began. March marked the third straight monthly increase in sales to start 2017. Inventories on a months’ supply basis fell even though total inventories rose by 3,000, highlighting the strength in March’s sales number. As construction picks up, we should expect to see inventories pick up and help drive sales.