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Residential Construction and Sales March Onward

March saw a 4.5% increase in new single-family home sales month over month, according to the latest New Home Sales report from the Census Bureau and the Department of Housing and Urban Development. [1] According to the report, March 2019’s seasonally adjusted annual rate of 692,000 new home sales is above February’s 662,000, and is 3.0% above the March 2018 estimate of 672,000.

According to Danielle Hale, Chief Economist for realtor.com, March’s growth indicates potential strengthening of home sales.

“Although weaker March existing home sales followed muted February pending home sales, March new home sales data continues to show strength with 692,000 new home sales, up 4.5% from February and above last year’s sales pace (3.0%),” Hale said. “This trend supports the fact that lower mortgage rates have started to entice buyers this spring and foreshadows a potential strengthening of pending and existing home sales in the months to come. Looking forward, orders should also help bolster builder confidence and boost new construction. We've already seen a slight improvement in builder confidence. Continued moderation in the median price due to an increase in the share of sales in the $200,000-$300,000 category is also a good sign. In this housing market, affordability for buyers is key.”

Current new housing inventory sits at 344,000 as of the end of March, representing a supply of six months, and the median sales price of new houses sold in March 2019 was $302,700. Tian Liu, Chief Economist at Genworth Mortgage Insurance, also commented on the New Home Sales Data, and what price points homebuilders should focus on, given March’s data, when expanding this inventory.

“New homes at the entry level (under $300,000) have been selling well in the past few months even during the 4Q’18 slowdown,” Liu said. “It shows that there is significant demand in that price category and homebuilders will do well to expand production at those prices.”