New home sales in March fell 1.5 percent to a seasonally-adjusted annual rate of 511,000 units, according to estimates released jointly recently by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.5 percent below the revised February rate of 519,000, but is 5.4 percent above the March 2015 estimate of 485,000. If these numbers make you uneasy, take a breath. Experts disagree about the weight behind the results.
“The new home sales report covering March released [Monday] by the Commerce Department reveals little solid evidence regarding any changing trends from what happened in February and even from what happened in March last year in the new home market,” says Jonathan Smoke, Chief Economist with realtor.com®. “As we have become accustomed to see in the new home sales reports, the underlying survey data for March were once again so statistically limited that the headline decline in sales should be taken with caution. This has been true for every month this year.”
The median sales price of new houses sold in March 2016 was $288,000; the average sales price was $356,200. The seasonally adjusted estimate of new houses for sale at the end of March was 246,000. This represents a supply of 5.8 months at the current sales rate.
“It is encouraging that the median new home price declined from February and relative to last March,” says Smoke. “This decline represents a shift in product being offered toward more affordably priced entry-level homes. To see growth in the new home market, we will have to see more offerings that appeal to the first-time buyer. In March, the median new home price of $288,800, was down 2 percent from last year.
“In this recovery, March has typically produced the most new home contracts for the year. This report pegged March’s non-seasonally adjusted volume of new home contracts at 48,000, which is 4 percent greater than last year. That level of new home sales puts this March just shy of the 49,000 new homes sold in March 2008, while the market was in free-fall.”
“New home sales have been a mixed bag lately,” says Quicken Loans vice president Bill Banfield. “Despite the decline in sales so far this year, we’ve continued to see modest growth overall and an increase in supply that will help consumers with more choices in their home buying search.”
To view the data in full, click here.