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March Home Sales Forecast: Blame It on the Cold
Our forecast suggests a year-over-year new home sales growth of 5.7 percent in March – the slowest pace of annual growth in new home sales since early 2014 (the weather-related drop in December 2016 aside). However, if recent trends continue, the year-over-year growth rate of new home sales could slow to 0.6 percent in May.
- Zillow expects existing home sales to be essentially flat in March, holding near 5.48 million units at a seasonally adjusted annual rate (SAAR).
- New home sales should fall 4.1 percent from February, to 568,000 units (SAAR).
Tight inventory and cold weather should, once again, weigh on home sales in March. Zillow’s forecast suggests that existing home sales, which the National Association of Realtors (NAR) will report on April 21, should edge 0.1 percent higher to 5.49 million units at a seasonally adjusted annual rate (SAAR) from 5.48 million units in February – essentially unchanged for all intents and purposes.

Though for-sale inventory edged higher in February, meaning that home shoppers in February and March had more options, the increase was driven entirely by the volatile condo/coop category and for-sale inventory for single-family homes was flat at a historically low level. Moreover, mortgage rates edged higher for much of March, averaging 4.06 percent over the month versus a monthly average of 4 percent in February. It was the highest monthly average mortgage rate since September 2014.
The Census Bureau reports new home sales on April 25, and we expect the number of new homes sold in March to fall 4.1 percent to 568,000 units (SAAR) – back in line with the range of new home sales for much of the second half of last year, before weather-related volatility in December (figure 2).
Despite expectations of a surge in new home building, new home sales have been stubbornly flat over the past year. Our forecast suggests a year-over-year new home sales growth of 5.7 percent in March – the slowest pace of annual growth in new home sales since early 2014 (the weather-related drop in December 2016 aside). However, if recent trends continue, the year-over-year growth rate of new home sales could slow to 0.6 percent in May.

On the longer horizon, we expect existing home sales to increase 6.5 percent over the next year to 5.74 million units (SAAR) and new home sales to increase 10.1 percent to 591,000 units (SAAR). We expect the median price of existing homes sold to rise 9 percent over the next year to $248,500 and the median price of new homes sold to climb 8 percent to $333,600.
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