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New home sales unexpectedly spike to 8-month high

Posted by Julie Wright on Tuesday, April 25th, 2017 at 1:33pm.

Purchases of new U.S. homes unexpectedly increased in March to an eight-month high, indicating housing demand remained strong at the start of the spring buying season, Commerce Department data showed Tuesday.



Key Points

  • Single-family home sales increased 5.8 percent to a 621,000 annualized pace (median forecast called for a 584,000 rate)
  • The median sale price of a new house rose 1.2 percent from March 2016 to $315,100
  • Supply of homes shrank to 5.2 months from 5.4 months; there were 268,000 new houses on the market at the end of March

Big Picture

Steady job growth and improving wages are continuing to drive demand, building on last year’s new-home sales that were the strongest since 2007. While mortgage costs remain above pre-election levels, they’re becoming less of a curb on the market, with the average 30-year fixed rate falling last week to the lowest since November. Still, lean inventories and rising prices may restrain any gains.

Other Details

  • Rise in demand was led by a 16.7 percent gain in the West, which had the fastest sales pace since 2007; the South and Northeast also saw gains, while purchases slowed in Midwest
  • The February reading was revised to a 587,000 pace from a previously estimated 592,000
  • Commerce Department said there was 90 percent confidence that the change in sales last month ranged from a 9.7 percent drop to a 21.3 percent increase, underscoring the volatility of the data
  • New-home sales account for about 10 percent of the residential market and are tabulated when contracts are signed; existing-home sales, which rose 4.4 percent last month, are based on contract closings



Copyright Bloomberg 2017

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