Key Takeaways from the March New Home Sales Report
- New home sales fell 11.4 percent in March from February, to 481,000 units (SAAR), according to the U.S. Census Bureau.
- Sluggish sales in the South and Northeast accounted for almost all of the drop in sales volume, with the South contributing 82 percent of the overall decline.
- Since the housing bust, the South has shown the strongest recovery, with the West also showing signs of improvement. Recoveries in the Midwest and Northeast have been modest, at best.
Sales of newly built homes had been rising fairly steadily over the past six months. But new home sales in March put a dent in that streak, falling 11.4 percent from February to 481,000 units at a seasonally adjusted annual rate (SAAR), according to the U.S. Census Bureau.
March’s decline represents just the tenth time in the last decade in which new home sales have fallen by more than 10 percent from the prior month, and stands in contrast to a much stronger-than-expected increase in existing home sales. Still, despite the March speed bump, new home sales activity remains 19.4 percent above where it was a year ago (figure 1).
New home sales were down in three of the four regions covered by the Census Bureau: the Northeast, the Midwest and the West. Sales in the Northeast fell the most month-over-month, down 33 percent from February. But over the past year, the Northeast has only accounted for an average of 6 percent of total new home sales nationwide. Sales in the South, which has accounted for more than half (55 percent) of total U.S. new home sales over the past year, fell 16 percent from February. This decline in the South accounted for 9 of the 11 percentage-point drop in total sales, while the northeast accounted for most of the remaining 2 points.
New home sales bottomed out in 2011 after the housing bust, and since then, the South region has been recovering most quickly. Sales of new homes in the South and West regions are now at levels last seen in the mid-1990’s.
Sales volume in the Midwest and Northeast, however, have been disappointing. The Midwest has only recovered to early 1980’s levels, while new home sales in the Northeast are actually at their lowest recorded level since 1973.