New home sales drop
Sales of newly built, single-family homes dropped 7.1 percent to a seasonally adjusted annual rate of 328,000 units in March from an upwardly revised, robust pace of 353,000 units in February, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Commerce Department.
“The March decline is from a stronger-than-expected sales pace in February, and looking at the first quarter as a whole, sales are up 3.7 percent from the fourth quarter of 2011,” noted NAHB Chief Economist, Dr. David Crowe. “This is exactly the kind of modest, but substantive, growth that we are expecting to see in the year ahead along with gradual firming of the economy and job market.”
Regional performances varied in March with sales activity in the Northeast increasing 7.7 percent and jumping 3.1 percent in the South, while the Midwest fell 20 percent and the West plummeted 27 percent, painting an extremely different portrait from one coast to the other.
The inventory of new homes for sale continued to shrink in March to a new record low of just 144,000 units, which at the current sales pace is a 5.3-month supply.
Have new home sales bottomed out?
“Even though sales are still very low, new home sales have clearly bottomed. New home sales have averaged 335 thousand SAAR over the last 5 months, after averaging under 300 thousand for the previous 18 months. All of the recent revisions have been up too. This was a solid report and above the consensus forecast,” opines the Calculated Risk Blog.
“Some new-home sales that would have happened this March were likely pulled forward as a result of exceedingly good weather conditions across much of the country in February, when we recorded the quickest sales pace since the end of the home buyer tax credit,” noted Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “The bottom line is that builders in many markets are reporting more interest among prospective buyers, with the main sticking points for sales right now being access to credit for builders and buyers, and problems with obtaining accurate appraisals.”