March New Home Sales: Inventory Maintains Earlier Gain

• New home sales increased in March for the second consecutive month, rising 4 percent from February to 694,000 units (SAAR), according to the U.S. Census Bureau.
• Weather related weakness in the Northeast and Midwest was offset by exceptionally strong sales in the West.
• The number of new homes on the market was flat at 301,000 units (SAAR), the first string of two months in a row with inventory above 300,000 in almost a decade.
• The median seasonally adjusted price of new homes sold in March increased by 2.1 percent from February to $336,100, a new all-time high beating the previous record of $334,900 reported in November 2017.

New home sales rose by 4 percent from February to 694,000 units in March at a seasonally adjusted annual rate (SAAR), according to the U.S. Census Bureau. Compared to a year ago, new home sales are up 8.8 percent, and except for November 2017, at their highest point since October 2007.

In a lesson of just how volatile initial new home sales data can be, sales for the previous three months were revised sharply upward by a combined 152,000 units. Instead of the initially reported 0.6 percent drop, February sales are now reported to have been up 3.6 percent from January, and instead of the initially reported 7.8 percent drop, January new home sales are now known to have been flat from December. Overall, the revisions make winter sales – which had originally looked disappointing – much more promising for the state of the housing market.

The trend diverged sharply between the Northeast and Midwest – which saw sharp month-over-month declines in sales (down 54.8 percent to 19,000 units and down 2.4 percent to 82,000 units respectively), likely due to wintry weather in March – while the South and West saw increases in new home sales (up 28.3 percent to 222,000 units and up 0.8 percent to 371,000, respectively). Year-over-year, new home sales were up 24.7 percent in the West and up 10.4 percent in the South, but down 52.5 percent in the Northeast and down 2.4 percent in the Midwest

Inventory was steady at 301,000 units (SAAR), up 13.2 percent (about 35,000 units) over the past year, but February inventory was revised slightly downward from an initially reported 305,000 units (SAAR). Still, it is the first string of two consecutive months  with homes for-sale cracking 300,000 in almost a decade, since spring 2009.

The median seasonally adjusted price of new homes sold in March increased by 2.1 percent from February to $336,100, a new all-time high beating the previous record of $334,900 reported in November 2017. Over the past year, the median seasonally-adjusted sale price of new homes is up 4.8 percent, or about $15,500.