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.
- 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
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.
- 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
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