Sales of new U.S. homes rose in March to a 16-month high, with a third-straight increase that reflects a boost from lower borrowing costs.
Single-family home sales rose 4.5 percent to a 692,000 annualized pace that exceeded all estimates in Bloomberg's survey, while February's figure was revised down slightly, government data showed Tuesday. The median sales price decreased 9.7 percent from a year earlier to a two-year low of $302,700.
In March, 16 percent of new homes were sold for less than $200,000. This was marked increase from 2018, when just 12 percent of new homes sold for less than $200,000. Still, monthly sales figures can be volatile, and the industry's preference for more profitable homes at higher prices could cause that share to dip in the coming months.
For the first three months of the year, new-home sales were 1.7 percent higher than the same period a year ago.
The surprisingly strong reading -- the second-best pace of the economic expansion -- suggests lower mortgage rates, rising wages and the Federal Reserve's pause on borrowing costs are helping the housing market regain its footing after stumbling last year.
"Homebuilders continue to indicate encouraging orders and traffic trends, crediting the drop in mortgage rates with re-energizing housing demand," said Stephen Stanley, chief economist at Amherst Pierpont Securities. "The next two to three months will be critical, as the spring selling season will be a telling test of whether housing demand is truly firming."
Still, other March data have been less upbeat, as existing-home sales plunged 4.9 percent in March and housing starts slumped to the slowest pace since May 2017.
The number of properties sold for which construction hadn't yet started grew to 200,000, the most since November 2017, indicating lower mortgage rates have lured more buyers. A Mortgage Bankers Association report earlier this month showed applications for loans to buy U.S. homes rose to the highest level in almost nine years.
New-home purchases account for about 10 percent of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously owned homes, which are calculated when contracts close.
Purchases of new homes climbed in three of four regions, led by a 17.6 percent jump in the Midwest. The Northeast saw a 22.2 percent drop, the steepest since July.
Economists in Bloomberg's survey projected sales falling to a 649,000 pace, with forecasts ranging from 601,000 to 680,000.
The supply of homes at the current sales rate fell to six months from 6.3 months in February. While the number of new homes for sale at the end of the period was little changed at 344,000, the number of completed homes for sale rose to 77,000, the most since 2010.
The March figures mark a return to the original schedule after delays from the government shutdown that ended in January. The report is published jointly by the Census Bureau and Department of Housing and Urban Development.
Information for this article was contributed by Reade Pickert and Jordan Yadoo of Bloomberg News and by Josh Boak of The Associated Press.
Business on 04/24/2019