Lower mortgage rates and limited existing inventory helped to push new home sales up in March, even as builders continue to grapple with increased construction costs and material supply disruptions, according to a release from the National Association of Home Builders.
Sales of newly built, single-family homes in March increased 9.6% to a 683,000 seasonally adjusted annual rate from a downwardly revised reading in February, according to data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
“A lack of resale inventory combined with many builders offering price incentives helped to push new home sales higher in March,” Alicia Huey, chairman of the National Association of Home Builders (NAHB), said in a news release. “However, sales are down 3.4% compared to a year ago because of the shortage of electrical transformer equipment and building material price volatility.”
New single-family home inventory fell 9.5% in March, however, it remained elevated at a 7.6 months’ supply at the current building pace. A measure near a 6 months’ supply is considered balanced. Completed, ready-to-occupy inventory stood at 70,000 homes in March and is up 119% from a year ago. However, that inventory type remains just 16% of total inventory. Total new home inventory peaked in October at 466,000 and has been declining since that time, with a total inventory of 432,000 available for sale in March.
The median new home sale price rose in March to $449,800, up 3.2% compared to a year ago. Elevated costs of construction have contributed to a rise in home prices.
Regionally, on a year-to-date basis, new home sales fell 19.6% in the Midwest, 5.8% in the South and 32.2% in the West, but rose 1.7% in the Northeast.