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New Home Sales See Steepest Decline in 13 Months

New homes sales fell 7.1 percent in March to a seasonally adjusted annual rate of 328,000, the steepest percentage decline since February 2011, according to the ""Commerce Department"":http://www.commerce.gov/.


Sales for January were revised upward from 313,000 to 353,000. Economists had expected the report to show a seasonally adjusted annualized rate of 318,000 new home sales in March. New home sales in March were up 7.5 percent from March 2011.

The median price of a new home fell 1.0 percent in March to $234,500, but was up 6.3 percent from March 2011. The average price of a new home jumped to $291,200 in March, a $21,500 increase (8.0 percent) from February and $30,400 increase (11.7


percent) for March 2011.

About 31 percent of new homes sold in March carried prices of $300,000 or more, up from 25 percent in February.

The sales decline in March was likely exaggerated by February├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós sharp jump ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô the largest in a year ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô but was consistent with the monthly survey conducted by the National Association of Home Builders showing both a drop in buyer traffic and builder confidence.

Sales improved, on a seasonally adjusted annualized basis, in the Northeast and South, but plunged in the West and Midwest. Sales in the Midwest were at the lowest level since November 2010.

Unlike the report on existing home sales which is based on completed transactions (closings), new home sales report is based on contracts signed which could be cancelled.

According to the Commerce Department, the inventory of homes available for sale at the end of March fell to 144,000 from 150,000 in February. Based on the sales pace, the months' supply of new-homes for sale increased to 5.3 from 5.0 at the end of February. The inventory showed improvement from the 7.0 months' supply in March 2011.

The March sales pace compared with the Commerce report last week that builders completed 440,000 new single-family homes in February, suggesting a further increase in inventories and some downward pressure on new home prices.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.

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